Technical Analysis | Stock Market Timing Signals | Top Stock Picks

Reacting to a “less bad” government employment report, stock prices increased sharply today.  The Dow was up 122 points or a little more than 1%, the Nasdaq added 34 points or 1.48%, the S&P500 added 15.72 or 1.4%.  The broad market index added 167 points or 1.45%.

According to the monthly government employment report, employers shed 36,000 jobs in February, slightly more than were lost in January, as severe storms crippled East Coast cities.  Expectations were that 68,000 jobs would be lost and the unemployment rate would increase to 9.8%.  Not only were less jobs loss than expected, the unemployment rate decreased to 9.7%.

Employers hired 47,500 temporary workers whose hiring is often a sign that employers are looking to add staff but are not confident enough yet to hire employees directly. 

In addition, many retailers reported solid jumps in same-store sales. 

For all the talk about the weather affecting employment and retail, projections just didn’t seem to be that accurate. 

True, the numbers may be revised, but it’s a lot easier to identify evidence that the economy is on the mend, although without jobs for right now.

Stock prices on the monthly chart are getting close to moving above the PSAR indicator.  With the momentum indicators gaining strength we may have the makings or renewing the solid uptrend that existed in 2009.

On the weekly chart, prices are a hair below the recent 2010 highs set in January.  Breaking through the 2010 highs would be an important technical event for the market.  Trading volume increased for the week, but not significantly.  The momentum indicators continue to pick up steam so when the daily trend is in synch it appears time to consider new long positions.

On the daily chart prices rocketed up to the old 2010 high tide mark.  Trading volume increased but quite frankly was not at a level that creates lots of confidence in rallies.  Trading volume will need to increase at some point.  However, there is enough evidence that the time is right to buy stocks now although we’ll keep an eye on trading volume.

On the 30 minute chart prices shot out of the gate at the opening bell and moved up through the first hour of trading.  Prices then consolidated at the highs until buyers became more aggressive in the afternoon.  The last hour of trading created a close near the highs for the day.

Trading Strategy

Traders who followed yesterdays trading strategy would have considered new long positions between 10 & 10:30 market time as the market continued upward.

It’s likely that Mondays trading will be a consolidation day or will set off some consolidation near the 2010 highs so be wary of new long positions while this is taking place.

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View information on the model stock portfolio and how it grew by over 170% over the same time period that a buy-and-hold S&P 500 portfolio lost 14%.  No margin, options, penny stocks, commodities, or other high risk vehicles were used – just two well respected ETF stocks.

Get free, no obligation access to the real-time stock charts used in these posts.

View our free market timing signals ,  stock trading strategies , and stock trading forum at these links.

Stock prices hit the skids today as traders and investors looked forward to a long weekend and likely wanted to lock in some profits.  The broad market lost about 130 points today – a little over 1% of value.

Banks led the selloff today, even as JPMorgan announced better than expected earnings.  However, revenue missed forecasts.  Intel, who announced spectacular earnings after the market yesterday, fell about 2%. 

This type of action is beginning to appear as a market in a “buy on the rumor – sell on the news” type of environment.  The rumor being increased earnings during the fourth quarter, and the news is starting to come out.  This is the type of situation where big institutions start to unload stocks at high prices onto retail investors.

So we need to be extremely careful in this environment.  This could be the beginnings of a new longer term downtrend.  We’ll have to stand aside and see how this reaction plays out.  There is definitely a slowing of upwards momentum on the longer term charts.

January trading is about half finished and the monthly chart appears to be already reacting to the overhead resistance at about the 12,000 level.  In addition to being a significant number, this level also corresponds to the low of September 2009 and the high of October 2009.  There are probably a lot of investors interested in getting back to even at this level.  Their selling activities could prove difficult to overcome. 

 Today’s sharp price drop is not very apparent on the weekly time frame.  All three indicators seem to be holding their own to some degree.  The CCI is above 100 but falling slightly, the MACD has returned to flat and the stochastic is still high but looking a little weak.

Another week like this one will likely move prices below the PSAR which would be another indication of a trend change.

Stock prices on the daily chart fell sharply and moved below the PSAR.  Two PSAR switches in as many days are real evidence of a market that just can’t make up its mind which direction it wants to go.  Trading volume increased today which is a sign of institution selling or “unloading at the top” type of action.

All three of the momentum indicators fell.

The 30 minute chart is really scary.  Prices fell precipitously from the opening bell until they reached the support level of the low set Tuesday.  Once at that level a hammer or bottoming candlestick was evidence that a bounce was likely.  Sure enough, prices stabilized a little with the last hour of trading at least pulling prices off the low for the day.

The indicators on the 30 minute chart appear to be showing a strengthening of upward momentum.  However, the market is closed on Monday so the next opening event is 3 days away, which will likely reduce the likelihood of this late small bit of strength contributing to Tuesday’s opening.

Trading Strategy:

Stand aside until these sharp movements identify a profitable trend.  We’ll let you know when that occurs.

Our strategy of only considering new positions in up markets should have kept you out of the market for the most of this week. 

Profit taking and tightening of stops should be the focus of activities before the market opens on Tuesday.

Stock prices will need to close solidly above the 11750 resistance level in order to justify even considering new long positions in this market.  

Technical Analysis, Market Timing, and Top Stock Pick posts are free on this blog but are delayed a few days. 

For a $1 trial of timely market timing updates and top stock picks emails sent to you after the close of the stock market on each trading day please visit our subscription page.

View information on the model stock portfolio and how it grew by over 170% over the same time period that a buy-and-hold S&P 500 portfolio lost 14%.  No margin, options, penny stocks, commodities, or other high risk vehicles were used – just two well respected ETF stocks.

Get free, no obligation access to the real-time stock charts used in these posts.

View our free market timing signals ,  stock trading strategies , and stock trading forum at these links.

Please do your own research to verify if these stocks meet your investment criteria, market timing, and technical analysis requirements prior to taking positions in any of these stocks.

Model Portfolio

Fully invested in Cash. 

VTI would need to move above a price of $58.35 in an up-market for consideration to move back into an invested position.

Date 1/12/10

Action: Stopped out at the stop price established at the close of the market on 1/11/10

Symbol: VTI

Purchase Price: 57.38

Selling Price: 57.20

Current Stop:

2010 performance to date:

1/5 through 1/12    -0.3%

Bullish Top Stock Picks (Swing Trade Watch List):

The following stocks have been selected for swing trades.  These stocks are in up trends, have recently reached a new high, and are currently pulling back to their 20 or 40 day moving average.

These stocks are candidates for purchase if the price moves above yesterdays high price, with a stop under yesterdays or todays low, whichever is lower.

See the market timing update for trading strategy.

Technical Analysis, Market Timing, and Top Stock Pick posts are free on this blog but are delayed a few days. 

For a $1 trial of timely market timing updates and top stock picks emails sent to you after the close of the stock market on each trading day please visit our subscription page.

View information on the model stock portfolio and how it grew by over 170% over the same time period that a buy-and-hold S&P 500 portfolio lost 14%.  No margin, options, penny stocks, commodities, or other high risk vehicles were used – just two well respected ETF stocks.

Get free, no obligation access to the real-time stock charts used in these posts.

View our free market timing signals ,  stock trading strategies , and stock trading forum at these links.

For a $1 trial of timely market timing updates and top stock picks emails sent to you after the close of the stock market on each trading day please visit our subscription page.

View information on the model stock portfolio and how it grew by over 170% over the same time period that a buy-and-hold S&P 500 portfolio lost 14%.  No margin, options, penny stocks, commodities, or other high risk vehicles were used – just two well respected ETF stocks.

Get free, no obligation access to the real-time stock charts used in these posts.

View our free market timing signals ,  stock trading strategies , and stock trading forum at these links.

Stock prices increased again today for the fourth day in a row.  Signs of an improvement in the retail sector and a rally in financial shares helped boost prices.  Broader indexes moved up less with the Nasdaq actually falling a point.

The labor market was again in focus today as traders and investors geared up for Friday’s big government jobs report.

Reflecting 4/5’s of the trading week, the weekly stock chart is showing a solid gain so far.  Prices are continuing the move up from the support level of the lower channel trend line.  The stochastic and the CCI indicator are continuing to move up. 

The MACD indicator is starting to show signs of life which is a very positive sign.  If this price trend continues it could set the stage for several more weeks of price increases.

On the daily chart, today’s action created a bottoming tail candlestick which could be another indicator of higher prices to come.  Trading volume was light today which is not what we would like to see, but with the use of well-planned stops a quick turnaround – if it should occur – would not devastate your portfolio.

The stochastic and MACD indicators are both positive today with the MACD hitting a new high in conjunction with new price highs.  The CCI indicator fell slightly but still remains in bullish territory.

On the 30 minute chart you can see that prices dropped significantly during the opening of trading today.  Then prices recovered and increased throughout the remainder of the market hours.  The last hour of trading included a sharp drop and recovery, and then a small candlestick with a small topping tail.  All the 3 indicators continued to move up further into bullish territory.

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.

Technical Analysis, Market Timing, and Top Stock Pick posts are free on this blog but are delayed a few days. 

For a $1 trial of timely market timing updates and top stock picks emails sent to you after the close of the stock market on each trading day please visit our subscription page.

View information on the model stock portfolio and how it grew by over 170% over the same time period that a buy-and-hold S&P 500 portfolio lost 14%.  No margin, options, penny stocks, commodities, or other high risk vehicles were used – just two well respected ETF stocks.

Get free, no obligation access to the real-time stock charts used in these posts.

View our free market timing signals ,  stock trading strategies , and stock trading forum at these links.