Some argue the worst is over. Here is a technical view of the markets..

The Weekly Report For May 11th – May 15th, 2009

May 10, 2009- Market Summary

The results from the bank stress tests, which were released Thursday, came in much stronger than many were expecting. The positive results helped fuel the best stretch of weekly gains the markets have seen in a decade. Given the results from the tests, it was no surprise to see the financial sector lead the way; especially when you consider the rise in Bank Of America shares of 59%.

It is worth mentioning that the Nasdaq managed to close higher for the nineth consecutive week, notching the most impressive string of weekly returns since December 1999. With the continued buying pressure comes a quickly approaching level of resistance. As you can see from the charts below, from a technical perspective, several key indicators, such as the relative strength index, are nearing overbought territory. The reading near 70 suggest that the index is overbought in the short term and that upside could be limited from here.

Other charts of interest continue to be the Dow and S&P500 because they even closer to the approaching the 200-day moving average. Many active traders will be keeping a close eye on these levels because they have historically been used to determine the direction of the market. A break above the 200-day moving average could trigger a long-term shift in sentiment.

(To learn more about levels of resistance, be sure to check out the Support And Resistance section of our Technical Analysis Tutorial.)