Technical Analysis | Stock Market Timing Signals | Top Stock Picks

Wall Street makes it 5 days in a row for positive price growth with the last hour of the weeks trading pushing broad market stock prices up over 300 points for the week. 

If you focus on the Dow Industrial 30 average or even the S&P 500 you’ll see slightly different results.  This is the main reason why we focus on the Wilshire 5000, it’s the broadest measure of the market widely available and is frequently the best indicator of market internals.

A surprisingly weak government jobs report early this morning kept traders on edge all day.  Just the reality that a disappointing jobs report didn’t result in the devastating loss is good sign for future stock price increases.  Although a consolidation or pullback is inevitable at some point, we’ll take all the gains we can get thank you.  With effective technical analysis and market timing we’ll be ready to jump off and pocket our gains when the time is right.

On the monthly chart prices are getting close to the overhead resistance level of 12,000, even though we have 500 points to go.  The monthly stochastic, CCI and MACD are still showing increasing upward momentum.  Although January is far from in the history books it can be useful to be aware of what is happening on the longer term.

On the weekly chart the CCI and the stochastic indicators are continuing their upward path.  The MACD looks comatose but if you reduce the chart length to anything less than 6 months it is clear that the MACD is gaining upward momentum. 

The stock price increase for the week created a solid bounce from the lower channel trend line and has moved the broad market solidly above the highs of the late 2009 consolidation period.  The upper channel trend line doesn’t really come into play until the 12,500 level.  But as mentioned above, we really should watch for some resistance as we approach 12,000.

Trading volume for the week was not as high as we would like to see for this much upward price action, so we’ll keep that in perspective for market timing and trading strategy suggestions.

On the daily chart this week’s price action is clear.  Wednesday was really the only indecision day.  Tuesday, Thursday, and today’s trading all created bottoming tails.

The 30 minute chart shows the initial fall during the opening of the market due to the concern over the jobs report.  Prices quickly recovered to just below yesterdays close, then spent most of the day below yesterdays close until the last hour of trading.

The last hour of trading was really where all the action was today.  Prices started breaking out late in the day and then the last 30 minutes was where all the gain for the day was made.  Prices finished at the high of the day, a good sign and may provide some more upward momentum for next week. 

Although I certainly wouldn’t expect another 5 days of gains, a consolidation or pullback at this level should not derail long positions taken in well chosen stocks.

Trading Strategy:

Traders should continue the strategy of new long positions in up trending stocks currently in a consolidation or pullback on decreasing volume.  The best market conditions to take on new long positions are in a rising 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.

With today’s unemployment report being much worse than expected, and the “worse-case” unemployment rate being increased beyond prior projections – it’s amazing that the stock market was able to hang on to yesterdays gains.

Perhaps traders and investors think that if the recent 3^rd quarter GDP growth was created with so many unemployed, just think what the rate will be once all these people get re-hired?

Or maybe big fund managers and institutions just don’t want to appear “under-invested” at the end of the year?

Either way, we’ll continue to use our technical analysis to generate profitable market timing signals and trading strategies no matter what they are thinking.

The first complete trading week in October has tacked on 3.25% to the broad market Wilshire 5000 average.  Every day except Wednesday has been a solid up day for the market. 

The weekly chart is still flashing the caution signal for next week but is appearing to be strengthening somewhat.  The CCI(20) seems to have stabilized at a level around 60.  Prices have reacted to the 10,500 support level with a respectable bounce this week of over 3%.  A price increase and close above the overhead resistance of approximately 11,250 would indicate a further strengthening of upward momentum.

On the daily time frame, the situation is not as precarious as it was this time last week.  Stock prices have managed to show strength after a couple serious down days prior to this recent week of trading.  On Wednesday of this week stock prices managed to cross the PSAR indicator to the bullish side.  The CCI(20) has moved quickly up from below the -100 level and appears ready to cross the zero line into bullish territory. 

Stock prices on the daily chart are still being affected by the combination of multiple overhead resistance lines which includes the down sloping trend line from the prior high, the up-sloping channel line, and the 20, 40, & 50 day moving averages.  Right above this resistance is the 11,000 level.  Price movement above these levels would certainly justify taking new long positions.

On the hourly chart the CCI(20) has held tough for the past several days’ right around the 100 level.  Prices fell below the PSAR indicator during the last hour of trading but recovered slightly to close within the upper half of the days trading range.

Trading Strategy:

With the market getting stronger and showing a capability to ingest relatively bad news on the employment front without serious heartburn (at least today), aggressive traders should consider new long positions but on market up days only.  More prudent traders should wait until prices move above the overhead resistance before considering new long positions.  

Visit the subscribe page.

It was a fairly flat day for stock prices today with the DJIA gaining 14 points while the S&P 500 lost a little more than 3 points.  The Nasdaq was the clear loser and gave up almost 26 points.  The Wilshire 5000, which is the broadest measure of market performance widely available lost 55 points or 0.47%.

Even with the poor performance of stock prices over the last 3 days, it’s still a little early to throw in the towel on this rally.  We won’t be selling this market short or taking new long positions until clearer direction is determined.  Although there are always bad statistics or news on a frequent basis, the general economic background continues to improve.

Let’s look at the stock charts for more technical analysis and market timing insight.

We’ll start with the daily stock chart today.  5 days ago stock prices signaled their intent to go down and prices have done just that.  However, the market may be just at the turning point and this is when market timing is so critical.

Stock prices on the daily chart are now right at the support level of the up trending lower channel line.  If you look back over the last 5 or 6 times this support level was reached, what followed was a fairly significant rally, one you’d definitely want to participate in! 

Today’s market timing signal chart is correct in indicating that a trend transition may be in process.  Prices just may not reach the tipping point quite yet.  This position is supported by technical analysis of the weekly and hourly stock charts.

On the weekly chart stock, prices are again right at the lower trend line.  It remains to be seen if this level will support another attack on the overhead resistance at 11,000. 

The more times an overhead resistance is attacked the weaker it gets.  If prices move above 11,000 again we may see a powerful move up towards the next overhead resistance at about 12,000.  The CCI(20) is still bullish and prices are still above the PSAR indicator, both of which support a bullish outlook – at least for now.

On the hourly stock chart, prices have hugged the lower down-trending line for almost two days of trading.  Prices are really close to moving above the PSAR indicator.  If prices do move up from here you could expect 11,000 and the upper channel line to act as overhead resistance. 

If prices move up from here, the 11,000 level and the upper channel line would likely create resistance together, so punching through would likely create a powerful move up.

Trading Strategy:

As we recommended yesterday, watching from the sidelines is the suggested strategy while the market decides to indicate whether it is safe for new long positions or new positions in contra-etf’s.

We will know what position to take once stock prices fall below the current support or move above the overhead resistance.  Don’t risk funds trying to predict what the market will do, just wait for the market to indicate the line of least resistance as it will sooner or later.