Nasdaq

Market participants are waiting for a pullback in stocks and it looks like the pullback has already started.

The Nasdaq index went briefly above its 200 day moving average, stayed above there for a few days and it has now drop below its 200 day moving average. It looks more and more like a false breakout.

The phase chart is now at “Recovery” phase moving down from “Accumulation” phase. It looks set to test its 50 day moving average.

The selling will intensify if the 50 day moving average is taken out by the bears.

STI

STI index has started its decent from its recent rally. The index has stayed in “Recovery” phase since 4 May 09. The 200 day moving average is at 1985. Since Jan 08, the 50 day moving average has been below its 200 day moving average with the index firmly below the 200 day moving average. May 09 marks the first time in more than a year in which the index stayed above its 200 day moving average.

The market is still not decided on whether it is a beginning of a new bull market or simply a bear market rally.

The next milestone to look at is to see whether the 50 day moving average can go above its 200 day moving average.