The broad market added 1.57% in today’s trading, is that enough to move stock prices out of the cautious mode?

Although up days like this are important at this stage of the current rally, today’s action was not enough to change our market timing posture from a neutral/bearish mode to bullish.

Free access to our market timing are charts are available here: Market Timing Charts.  View these charts for reference with the technical analysis below.

On the weekly stock chart the CCI(20) is currently stable at about 76, although only 1/5 of the trading week is contained in this indicator.  So it’s a little too early in the week to start drawing conclusions on where the week will end.

Today’s trading replaced almost 1/3 of last week’s loss, but the price is still below the PSAR indicator and so remains in a cautious position.  To turn fully bearish would require the CCI(20) to drop below the zero line while prices remain below the PSAR indicator.  It remains to be seen if the CCI(20) will drop below zero this week.

The daily stock chart is starting to look a little more positive.

The rebound in stock prices today has helped put a stronger floor under the support level of about 10,500.  This support level is where the lower channel line and the prior consolidation occurred in late August.  The CCI(20) on the daily stock chart has started to show some strength.  The CCI(5) is also getting stronger and could be a precursor to more strength if it can move above the zero line.

The hourly stock chart is clearly the strongest of the 3 time frames.  However, the hourly chart has traced a downward sloping channel with the upper trend line showing some resistance at about the 10,750 level.  If the hourly chart can move above this trend line then it’s likely that this momentum will spread to the longer time frames.

If this occurs then a fresh attack of the overheard resistance at the 11,000 level would appear likely.

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