After a weak start this morning, major stock indexes are stabilizing near some short-term support levels. Chart 1 shows the Dow Industrials finding support at its 50-day moving average and its mid-April intraday low at 22900. Chart 2 shows the S&P 500 holding support at 2797. So far, those support levels have kept the selling from becoming more serious. Chart 3 shows the Nasdaq Composite Index trading slightly lower, but trying to stabilize at its 20-day average (green line). Seven sectors are in the green today with financials in the lead. Bank stocks are finding support near previous lows.
Beaten-down financial stocks are rebounding. Chart 4 shows the Financial SPDR (XLF) gaining 2% today with banks in the lead. Bank stocks are testing some pretty important support levels. Chart 5 shows the KBW Bank Index trying to stabilize above its late March low. A drop below that March low would put banks at the lowest level in four years. That's an important test for them and probably for the rest of the market.
Editor's Note: This is an article that was originally published in John Murphy's Market Message on Thursday, May 14th at 2:00pm ET.