Amazingly, the market has given us four major trend changes in the past month alone, which apparently hasn't happened with such frequency in over 10 years. Last week, the market was staring into the proverbial abyss as the S&P 500 incurred the dreaded “death cross,” in which the 50-day moving average of price crossed down through the longer-term 200-day moving average.

One hesitates to put too much emphasis on any given week when discussing market trends, but this week could be the tipping point for the current market. Despite the S&P 500's 50-point gain last week on virtually no news at all, the fact remains that it is still more than 12% below the April 23rd high of 1217 and still has not broken out of the downward channel that began on April 26.

I hope you enjoyed the Fourth of July fireworks on Sunday, because there might not be much to celebrate on Wall Street this week.

Last week we warned that if most of the impending economic releases were negative, the market would likely fall worse than it did the week before.  And that’s what happened.  In fact, it dropped approximately twice as much as the week before. (It doesn’t feel so good to be right.)

Last week, the S&P 500 came perilously close to the dreaded 50-day moving average cross down through the 200-day moving average. This is usually considered by technicians to be an extremely bearish development. The S&P 500 came closer last week than the other major indexes, and actually set new lows for the year.

Sabrient’s SectorCast-ETF rankings are holding mostly steady; however, the continued fall in Consumer Discretionary against the other sector ETFs has suggested near-term weakness ahead for the markets – which has definitely played out since the minor top on June 21.

We began the month of June with the S&P 500 at 1089. Today, it closed at 1074, leaving just two more days to gain the lost ground and turn the month positive.  The Summer Solstice on June 21 marked the high point for the month, with an intraday high of 1131 and its sights set on the 50-day moving average above. What a difference a week makes.

Although Sabrient’s SectorCast-ETF rankings have not changed dramatically, there are some definite signs of a more conservative bent evolving. And there seems to be good reason for it. After carefully scaling the proverbial wall of worry last week, this week saw the market lose the important technical support levels that it had fought so hard to reclaim.

Last week was a good week for the market from a technical standpoint, with the S&P 500 moving ahead about 2% and pushing through two important layers of resistance.  It broke above its 200-day moving average, which had been providing stiff resistance for weeks, and also broke through even stronger resistance at the 1114 level.

The stock market is searching for direction, testing support and resistance levels each week. After threatening a waterfall decline last week, it instead found support and has rallied strongly. Today, the S&P 500 and Dow Jones Industrials joined the Nasdaq 100 and Russell 2000 by rising above the important 200-day moving average.