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No CommentsPrices on Wall Street surged today starting off the new year on a positive note. Traders were encouraged by a report that showed manufacturing activity is increasing and a weak dollar propelled commodity prices and stocks. Stock prices increased almost 2%.An increase in trading volume helped move prices up, but the increase in volume was really only an increase because last weeks trading was so light. So although increasing volume is good in conjunction with price increases, additional volume will likely be necessary to keep this rally alive.Let’s review the stock charts for an in-depth technical analysis and market timing viewpoint.Decembers trading created another solid price increase which makes 9 up-months out of the last 10. The monthly stochastic and CCI momentum indicators are bullish although the MACD appears to be flattening out a little. Prices are quickly approaching the 12,000 level on the broad market which may create some strong overhead resistance to deal with – especially because this level corresponds to the price level reached on the way down in the beginning of October 2008.On the weekly chart the MACD indicator is still flat lined, but more sharp increases like today will likely move the MACD upwards. Both the stochastic and the CCI moved upward on today’s action. Stock prices continued their upward move from the lower channel support line. The upper channel trend line shows the potential for this move at about the 12,500 level, about 1000 points higher than current prices. We’ll have to wait and see if this rally has the power to keep moving up in the weeks ahead.Market action on the daily chart created a bullish engulfing candlestick formation today. Frequently, a bullish engulfing pattern indicates more price increases to come, so our trading strategy will reflect less caution than the prior few weeks. The stochastic and CCI indicators moved up on today’s action. The MACD indicator also moved up without even going negative from last weeks down move. Prices today also moved above the PSAR indicator on the daily time frame.The 30 minute chart clearly shows the sharp bullish move in early morning trading. Prices moved up throughout the morning and lunchtime period, hit a rough spot in the early afternoon but recovered in the last hour of trading to close near the highs for the day. Prices moved below the PSAR late in the day so there may be some weakness in tomorrows trading, at least in early trading. If so we will use this opportunity to move the model portfolio into the market. See our top stock picks email for additional model portfolio information.
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.
Weekly Daily Strategy for next market day based on price position only. Refer to technical analysis & market timing verbiage for further details. Week End Date Weekly Trend Market Day Daily Trend 1/8/2010 Up Fr Th We Tu Mo Up New Longs On Up Days 1/1/2010 Up Fr Market Closed – Happy New Year! Th Caution Tighten Stops/Take Profits We Up New Longs On Up Days Tu Up New Longs On Up Days Mo Up New Longs On Up Days 12/25/2009 Up Fr Market Closed – Merry Christmas! Th Up New Longs On Up Days We Up New Longs On Up Days Tu Up New Longs On Up Days Mo Up New Longs On Up Days 12/18/2009 Up Fr Down Potential Trend Transition Th Caution Tighten Stops/Take Profits We Up New Longs On Up Days Tu Up New Longs On Up Days Mo Up New Longs On Up Days