Technical Analysis | Stock Market Timing Signals | Top Stock Picks

Stock prices continued to churn for the second day after the big run-up earlier in the week.

The weekly stochastic and CCI indicators continued their move up with the MACD remaining flat.  With over half of the trading week in the history books the weekly candlestick is still showing a solid move up.  However, two days are left in the trading week and all eyes are focused on the broader employment report due out on Friday.

Let’s go to the stock charts for an indepth technical analysis and market timing assessment.

The daily chart showed some churn in the market today with traders and investors considering weakness in the tech and telecom sector along with signs of a more stable job market and services sector.

The CCI and MACD on the daily chart continued their move up while the stochastic fell slightly.  Trading volume fell from yesterday but is right in line with average volumes.

The choppy trading can be seen clearly in the 30 minute chart.  Prices fell at the open, and then recovered a little bit, only to flip-flop above and below the zero line all day.

Trading Strategy:

Prudent and aggressive traders should consider new long positions on well chosen stocks on days the broad market is increasing in price.  This means that prices are above the prior days close and above the high created in the first 30 minutes of trading. 

The stock market achieved another modest gain today on the heels of a robust rally on the first day of the trading year.  Stock prices moved up a modest 34 points or so as traders await a variety of economic reports including auto sales, pending home sales, and factory orders, all due out in the next few days.

Technical analysis of the weekly trend still shows that the market timing strategy remains bullish with the stochastic and CCI indicators continuing to indicate strong upwards price momentum.  The MACD is still playing dead but remember that the MACD usually lags the stochastic and the CCI. 

 Frequently by the time the MACD really moves into bullish territory, about half of the current move is likely to be complete.

On the daily chart the CCI and the MACD indicator are bullish with the stochastic starting to flatten a little.  Stock prices on the daily time frame still moved up further from the support level and closer to the overhead resistance shown on the weekly chart of about 12,000.  So although the suggested strategy is still to consider new longs on days the market is moving up, there is always the possibility of increased headwinds the further prices increase.

On the 30 minute chart, prices moved up during the opening hour of trading which caused us to invest the model portfolio in shares of VTI as we mentioned in yesterdays market update.  See the top stocks email for additional model portfolio information.

Once the price increase of the opening hour was complete, prices fell back for most of the day until the last hour and a half of trading.  The last hour of trading saw traders pushing prices back up to the highs created during the opening hour.

This could add some momentum going into tomorrows trading.

Trading Strategy:

Prudent and aggressive traders should consider new long positions on well chosen stocks on days the broad market is increasing in price.  This means that prices are above the prior days close and above the high created in the first 30 minutes of trading.

Trading Strategy:

Traders should consider new long positions from our top stock picks if the market moves up tomorrow.  See the top stock picks email for additional information.

Santa Claus certainly seems to have visited Wall Street this week as the market delivered a steady stream of higher prices and continued to gain upward momentum during this shortened trading week. The weekly gain for the week was 266 points or almost 2.5%.  For the month so far the market has gained almost 4% in value.

Durable goods orders rose by a scant 0.2% in November, with a massive drop in aircraft sales as the major reason why the increase was so low.  Without transportation, durable goods orders would have risen 2%.  The National Association of Realtors reported that November existing sales rose while new home sales fell.  Personal spending & income rose in November along with consumer sentiment.  Jobless claims fell in the most recent report.

Can this rally continue? 

Next week is also a shortened trading week so caution is still advised.  But traders should be considering new long positions in leading equities which we provide every day in our top stock picks email.  Let’s review the stock charts for more technical analysis and market timing insights.

As mentioned above for the month – even though there are still a few days trading left in December – the broad market has added almost 4% to the value of stock prices.  The CCI indicator is kind of flat, but is in bullish territory of over 100.  Both the MACD and stochastic are showing increasing upward momentum.  Prices appear headed towards the next overhead resistance level of 12,000, but there may be some bumps along the way that we’ll need to navigate around.

On the weekly chart, stock prices have added 2.37% as the market moved up as expected from the support level between the 11,000 and 11,250 mark.  The MACD is still flat, but if this flat period turns out to be a consolidation then more price increases can be expected.  The stochastic and CCI indicators are both heading up, indicating a good possibility of prices continuing up in the weeks ahead.  Trading volume is down although this would be expected for the shortened holiday hours this week.

The price increases for each day during the week is clearly shown on the daily price chart.  All three of the momentum indicators, the CCI, MACD, and stochastic are reflecting increasing upward momentum.  As with the weekly chart, trading volume was extremely low for each day of the week which may be adding increased upward volatility, so trade with caution.

The 30 minute chart for Thursday was extremely bullish.  Prices jumped out of the gate for the 4^th day in a row, continued up at 10am (which is normally a reversal time for morning action), remained flat for the majority of the day, then the last hour of trading saw another increase in prices.

Trading Strategy: