Technical Analysis | Stock Market Timing Signals | Top Stock Picks

Stocks prices rose today but gave up much of the day’s gain as the afternoon turned to profit taking.  Driving prices up today was news about company mergers and signs that Greece won’t default on its debt.

The Dow Jones Industrial average finished the day just above unchanged.  The S&P 500 index added 2 points, or 0.2%, the Nada rose 7 points, or 0.3%.  The broader measure of the stock market added a little more than 36 points for a gain of 0.32%.  The broader index is a more accurate measure of market performance.

Although March trading is only two days old, the monthly chart appears to be gaining strength.  If prices can move above the overhead resistance at the highs of last October the momentum – and trading volume – may increase.

On the weekly chart prices continue to move up from the PSAR switch of last week.  The CCI has moved into positive territory and if prices can hold here for the rest of the week the market timing signal would move from cautious to up.  All three of the momentum indicators are gathering strength.

On the daily chart, today’s trading created a topping tail which may indicate weakness in the short term.  An encouraging aspect of today’s action is the increase in volume.  Although closing well of the highs for the day, an increase in trading volume on a market up day is a welcome sight. 

The 30 minute chart shows the price increase during the opening 30 minutes of trading.  Prices then moved up until the early afternoon when sellers became more aggressive.  The last half hour of trading move prices back up modestly.

Trading Strategy

Suggested trading strategy is to consider new long positions on market up-days. 

The momentum indicators are showing that the market is a little extended here so be careful of new positions with too much risk.

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Not much noteworthy news today but the market was ready to go up, at least for the short term.  In the news today was AIGs $35 billion asset sale, two mergers in the pharmaceutical sector, and hopes that the Greek bailout package may indeed become a reality.

The weekly stock chart appears to have resumed its upward trek.  Prices appear prepared to move above the mid-February high and also move above the psychological 11,500 level.  The CCI has moved into bullish territory and the stochastic and MACD appear to be moving up also. 

If the current numbers on the weekly chart were at the end of the trading week then the weekly chart would be even more bullish.  However, there are 4 trading days left this week and anything can happen, but for now the weekly trend and the daily trend are lining up in the upwards direction and the time is right to consider new long positions.

On the daily chart prices moved up sharply from the lower support trend-line.  Prices didn’t even stop for a breather at the old February high, or the overhead resistance at 11,400.  The momentum indicators are moving to the positive side.  The only downside is the lack of volume.

Trading volume continues to decrease.  Take this as a warning sign that this rally may be fickle.  Be ready to tighten stops and take profits, down drafts may be sharp and powerful.

On 30 minute chart prices moved up throughout the morning, paused for the balance of the day, and moved up again during the last day of trading to close at the high for the day.

Trading Strategy

Suggested trading strategy is to consider new long positions on market up-days. 

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View information on the model stock portfolio and how it grew by over 170% over the same time period that a buy-and-hold S&P 500 portfolio lost 14%.  No margin, options, penny stocks, commodities, or other high risk vehicles were used – just two well respected ETF stocks.

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Stock prices fell this week after digesting a steady stream of worse than expected news on the economy.  It’s quite surprising that the weeks loss wasn’t larger given the constant barrage of disappointing news.  The broad market wrapped up the week losing almost 50 points or a little more than 0.42%.

Investors and traders considered dismal news on the housing market, jobless claims, durable goods orders, and consumer confidence.  During the week, concerns about Greece’s debt crisis resurfaced like the monster in a bad horror flick that comes back to life.  It appears this monster may linger for a lot longer than anyone originally anticipated.

However, we need to remember that the stock climbs a wall of worry when prices are going up.  And the fact that prices didn’t drop further this week may indicate an underlying strength that may surface soon.  It’s too early to go short, but long positions have yet to be justified.  So we’ll wait until the market comes to us with trading opportunities.

On the weekly chart prices ended the week with a bottoming tail.  Trading volume was up for the week.  So the bullishness of the bottoming tail might be considered cancelled out by the increase in trading volume on a down week.  The CCI and MACD momentum indicators are fairly flat and the stochastic has dropped.  All things considered the weekly chart is sending mixed signals.

On the daily chart today’s trading created a sort of indecision candlestick.  Prices today remained below the PSAR level which indicates that long positions are risky.  The CCI looks like it is gaining strength, the stochastic is at least holding to the current level, but the MACD is still showing overbought.

The 30 minute chart shows the choppiness of today’s trading.  Prices look a little extended to the upside and ripe for a pullback, but there is a lot of time between today and the opening of trading on Monday.  Weekend news can change the investing picture a lot.

Trading Strategy:

Traders should watch for market strength before considering new long positions.  If the market moves above the daily PSAR and continues up then long positions would be appropriate.

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 Technical Analysis , Market Timing , and Top Stock Pick  posts are free on this blog but are delayed a few days. 

View information on the model stock portfolio  and how it grew by over 170% over the same time period that a buy-and-hold S&P 500 portfolio lost 14%.  No margin, options, penny stocks, commodities, or other high risk vehicles were used – just two well respected ETF stocks.

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Stock prices posted huge losses out of the gate at the morning bell but recovered somewhat by the close of the market.  Investors and traders reacted to the Greek debt situation and dismal economic news, including disappointing factory order numbers and worse than expected jobless claims.

The Dow lost 53 points, the Nasdaq lost 1.68 while the S&P500 lost 2.31.  The broad market lost 61 points.

On the weekly chart, prices are holding above the 11,000 support level.  Prices are above the PSAR indicator and the CCI is just below the zero level.  Movement of the CCI above zero is considered bullish territory but remember that price and volume are the primary technical indicators.

With one more day remaining in this trading week volume has already exceeded last week’s volume.  If the week ends with a loss on higher volume it is another cautionary sign that this trend may accelerate to the downside.

The weekly stochastic turned down and the MACD is flattening.

On the daily chart the market action today produced a huge bottoming tail, not unlike the bottoming tail formed during the latter part of the first week of trading this month.  However, the difference between that day of trading and today’s is that today’s price level is still somewhat extended to the upside.  So although a rally based on today’s action cannot be ruled out, it is less probable than at the beginning of the month.

Trading volume increased today on yet another down day overall.

On the 30 minute chart you can clearly see the drastic drop in prices at the opening bell.  Prices created an opening gap that was closed late in the day.  This is considered a technically strong move.  Most of the price recovery occurred during the last hour of trading.

Trading Strategy:

Traders should consider new long positions only on market up days.  Even markets up days are an elevated risk given the volume concerns. 

Because prices on the daily chart have moved below the PSAR indicator, consider tightening stops and taking some profits.

View the free market timing signals  ,  stock trading strategies  , and stock trading forum .

 Technical Analysis , Market Timing , and Top Stock Pick  posts are free on this blog but are delayed a few days. 

View information on the model stock portfolio  and how it grew by over 170% over the same time period that a buy-and-hold S&P 500 portfolio lost 14%.  No margin, options, penny stocks, commodities, or other high risk vehicles were used – just two well respected ETF stocks.

Get free, no obligation access to the real-time stock charts  used in these posts.

Sample a $1 trial of timely market timing updates and top stock picks emails sent to you after the close of the stock market on each trading day at the subscription page.

View the free market timing signals  ,  stock trading strategies  , and stock trading forum .

 Technical Analysis , Market Timing , and Top Stock Pick  posts are free on this blog but are delayed a few days. 

View information on the model stock portfolio  and how it grew by over 170% over the same time period that a buy-and-hold S&P 500 portfolio lost 14%.  No margin, options, penny stocks, commodities, or other high risk vehicles were used – just two well respected ETF stocks.

Get free, no obligation access to the real-time stock charts  used in these posts.

Sample a $1 trial of timely market timing updates and top stock picks emails sent to you after the close of the stock market on each trading day at the subscription page.

View the free market timing signals  ,  stock trading strategies  , and stock trading forum .

 Technical Analysis , Market Timing , and Top Stock Pick posts are free on this blog but are delayed a few days. 

View information on the model stock portfolio and how it grew by over 170% over the same time period that a buy-and-hold S&P 500 portfolio lost 14%.  No margin, options, penny stocks, commodities, or other high risk vehicles were used – just two well respected ETF stocks.

Get free, no obligation access to the real-time stock charts used in these posts.

Sample a $1 trial of timely market timing updates and top stock picks emails sent to you after the close of the stock market on each trading day at the subscription page.