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Technical Analysis and Market Timing Update for 11/10/09
1 CommentTrading action today created a classic “indecision day” type of candlestick on the daily chart.
After yesterday’s huge run-up, an indecision day is just what you’d like to see on the day after – unless prices run up again. An indecision day gives the market a chance to digest recent gains and provides evidence that profit taking is not the first thing on trader’s minds.
The recent months of trading has produced several of these types of trading days, look at the daily chart on July 17, September 11, and most recently October 7. All these days were indecision days after a run-up in prices.
You’ll also note that after these indecision days, prices had a tendency to take-off to the upside again. Will that be the case this week? We hope so and our trading strategy – see below – will take advantage of this action if it occurs.
On the weekly chart, prices did not move up to trip the PSAR indicator into a bullish mode. The CCI(20) moved up to a level of 93.63. If prices move up tomorrow we could have a PSAR move to the bullish side which would also provide momentum for a break through of the overhead resistance at the 11,250 level.
On the daily chart, the CCI(20) has moved up to 57.22 and with stock prices still above the PSAR indicator, the daily mode appears to have some upward momentum left.
On the hourly chart you can see the controlled amount of profit taking that took place in the morning. Another sign of strength were the bottoming tails that were created during the mid-day hours. The last hours of trading recovered the morning loss and prices finished just about where they started.
The final hour of trading moved stock prices above the PSAR so perhaps this late day market strength will influence prices tomorrow.
Trading Strategy:
Traders should consider new long positions on trading days when prices are moving up. This means that stock prices are above the high made during the first half hour of trading and moving higher. Unless this condition occurs during the day tomorrow, traders should take no action.
Weekly Daily Strategy for next market day based on price position only. Refer to technical analysis & market timing verbiage for further details. Week End Date Weekly Trend Market Day Daily Trend 11/13/2009 Caution Fr Th We Tu Up Potential Trend Transition Mo Up Potential Trend Transition 11/6/2009 Caution Fr Caution Potential Trend Transition Th Caution Potential Trend Transition We Caution Potential Trend Transition Tu Down Potential Trend Transition Mo Down Potential Trend Transition 10/30/2009 Up Fr Down Potential Trend Transition Th Down Potential Trend Transition We Down Potential Trend Transition Tu Down Potential Trend Transition Mo Caution Tighten Stops/Take Profits 10/23/2009 Up Fr Caution Tighten Stops/Take Profits Th Caution Tighten Stops/Take Profits We Caution Tighten Stops/Take Profits Tu Up New Longs On Up Days Mo Up New Longs On Up Days Published on November 10, 2009 · Filed under: Bottoming Tail, Candlestick pattern, Market Timing, Technical Analysis, Trading Strategy; Tagged as: Bottoming Tail, candlestick chart, Indecision Day, Last hour of trading, Market Timing, Profit Taking, Technical Analysis
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