Stock trading continued their move up today following yesterday’s indecision day.

Although stock prices pulled back from the highs of the day, they finished in the middle of the days price range for a solid gain of approximately 60 points.

As we reviewed in yesterdays post, prices did move up sufficiently today to trip the weekly PSAR into a bullish position.  The weekly CCI(20) is moving solidly upwards and is currently at a level of 99.92.

Although there are still two days of trading remaining before the weekly chart will be complete.  Using technical analysis techniques it appears probable that the week will finish in a bullish mode.  There is always the possibility that conditions could reverse by the end of the week but stock prices would have to drop below 10,500 to drop below the PSAR indicator.

Again, on the weekly chart, stock prices have reached the level of the sharp downturn in weekly prices that occurred in late September of 2008.  This level combined with the 11,200 to 11,250 level could present some additional resistance to overcome before prices can move solidly higher. 

The next overhead resistance on the weekly chart is approximately 1000 points higher at around 12,250.

The interaction with overhead resistance levels is even clearer on the daily time frame.  Not only do the weekly time frame resistance levels come into play but prices are just below the prior daily high set in mid October of this year.

On the daily chart the CCI(20) has moved firmly into bullish territory and is currently 79.40.  Stock trading action today created a topping tail candlestick that may indicate some future weakness as the overhead resistance is either worked through or pushes prices back down into a consolidation pattern.  A breakthrough and close above this resistance level is crucial for prices to keep their upward momentum.

On the hourly chart, stock prices have carved a fairly aggressive upward sloping channel.  Stock prices are currently at the lower channel line.  Also on the daily time frame the overhead resistance from mid October is clearly in play with stock prices at this level.

However, the last hour of trading did produce a bottoming tail candlestick which may predict trading strength tomorrow if it carries over.

Trading Strategy:

Traders should watch for a move above the overhead resistance at the 11,250 level before considering new long positions in this market. Prudent traders may want to wait for a close above this level before considering new long positions.

Once above the overhead resistance, traders should only 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.   View the subscription options.