The Cinco de Mayo correction call by Investor’s Business Daily did hold to form as the major indices averaged a 2.5% loss for the month. The Nasdaq (Figure 1) is representive of the downward stair step action for May and what looks to be a dead cat bounce back to the 50 day moving average. It’s possible to see the Nasdaq rally up to the the 2825 level, but the weakness of recent price gains, along with overhead pressure, suggests that the market is headed lower.
Inspite of overall weakness, a few leading stocks have done well and should be watched closely. These are NFLX (Netflix,Inc), CMG (Chipolte Mexican Grill), AMZN (Amazon Corp), GMCR (Green Mountain Coffee Roasters).
Figure 1
June’s pick of the month is GLD (SPDR GOLD Trust). With all the attention turned to the rise and fall of silver, gold has been quietly building the right side of its cup formation and signalled a pocket pivot buy point on 5/22 (Figure 2). Global default worries continue to be a backdrop to demand. Fitch downgraded Greek debt again; and Jean-Claude Juncker, President of the ECB warned that an audit currently underway may reveal that the country may not be eligible to receive financial aid next year. Norway has already frozen its 235 million kroner ($42.6 million) aid package to Greece.
Leadership Stocks 