Technical Analysis and yesterday’s suggestion to wait until a clear direction was established on the hourly stock chart was clearly fulfilled shortly after the opening bell today.

Stock prices increased from the open, shot past the 11,000 resistance level, and didn’t have a reaction or fallback on the hourly chart all day.  Clearly, today was a day to enter the cautious longs that you selected from our top stock list.

With the stock market adding approximately 1.77% to its value today, the weekly stock chart is appearing that it will maintain its bullish posture through the end of the weeks trading.  If this happens – and it’s likely that it will – the caution indicator will be replaced by the green “Up” indicator in preparation for next weeks trading.

However, don’t wait until then to take new long positions in this market as they make sense through your own analysis.

On the monthly time frame, Octobers trading is still at highs for the month.  The monthly CCI(20) is now above the zero line.  If stock prices remain above the PSAR and the CCI(20) remains above zero, a monthly uptrend will have been confirmed on the monthly chart.  The last time the monthly chart was bullish was at the end of 2008.

However, short term traders should continue to watch the shorter time frames for profitable opportunities even when the monthly chart confirms a bullish posture.

On the daily stock chart, prices are above the PSAR indicator and the CCI(20) is back above the 100 level.  The index value is at 11,168.31, a good way above the 11,000 level.  

Prices may pull back a little from here and if they do, technical analysis would expect the 11,000 level to now act as support for stock prices.  After today’s price increase it would be prudent to watch for a little consolidation at this level and perhaps plan for buying positions from your shopping list as prices stabilize.

On the hourly stock chart you can clearly see the sharp increase in prices in the first hour of trading and the last hour of trading.  In between there was a continuous grinding up of prices without much consolidation at all.  Both the PSAR indicator and the CCI(20) are bullish.  You may want to consider waiting for a pullback on the CCI(5) before taking on new long positions.

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As expected from last weeks post, today’s trading was strong enough to trip the weekly stock chart to a confirmed bullish mode.  However, this could be just an aberration because only 1/5 of the trading on the weekly time frame is complete.  The remaining 4 days of trading could keep the caution indicator present.

Technical analysis shows that stock prices are just a little higher than the 11,000 resistance level that caused the recent consolidation.  If prices can break through this level and mount a sustained move upward then this rally could easily head towards the next resistance level at about 12,000.

On the daily stock chart, prices continued their move higher with both the CCI(20) and the PSAR reading remaining in the positive or bullish mode.

Traders who took advantage of last weeks suggestion to consider cautious new long positions would have taken the right move. 

Still, the two week consolidation on the weekly chart leaves us a little suspicious and we aren’t ready to throw all caution to the wind at this point, especially with a lot of earnings announcements just around the corner.

Check out our market timing signals for more insight on the current ralley

On the hourly chart the last two hours of trading saw a severe downturn in prices and then a mild recovery.  The last hour of trading each day has really been exciting over the last few weeks.