Technical Analysis | Stock Market Timing Signals | Top Stock Picks

No real earth shattering news today that was likely to drive the market in either direction.  News consisted of the continuing hand-wringing about the banking sector and the possibility for Bernanke’s second term.  A weaker-than-expected report on the housing market didn’t help.

With the CCI dropping below the zero line in today’s action you could say that a weekly downtrend has been confirmed.  However, we don’t call trends on middle of the day market action and we don’t call weekly trend changes in the middle of the week either. 

On the other hand, the general positioning of prices on the weekly chart should be part of any trading strategy, and right now a downtrend seems inevitable on a weekly basis.  

On the daily chart, today’s trading created a topping tail candlestick which means as prices moved up they brought out more sellers than buyers.  It is possible that the market may eventually rally from this level which will set up the short sale environment we’ll be waiting for.  In situations like these it’s frequently better to wait for the market to come to you.

All three of the daily momentum indicators are bearish but appear to be pointing towards a bullish bounce.

On the 30 minute chart you can see the price increase at the opening that brought sellers into the market.  Prices dropped in late morning trading to the open of the day.  Prices then moved up until the last hour of trading when some profit taking occurred.

Trading Strategy:

It still appears to be a little early for short positions.  What we are looking for is a consolidation at this level at least in order to justify short positions.  Short positions are then best entered at a break-down from this consolidation level or after a bullish bounce.

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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:

Stocks moved higher again today for the fourth day in a row, shrugging off conflicting economic reports.  The Dow was flat, but the broader market showed a solid gain of almost 40 points by the close of trading.

Stocks slid mid-morning as news regarding sales of new homes fell in November.  A separate report showed personal incomes and spending both rose, but not as much as expected.  A survey of consumer sentiment hit a 3-month high.

The market regained lost ground in the afternoon as a rally in the oil market boosted share prices of industrial companies and energy producers.

Let’s examine the stock charts for additional technical analysis and market timing insights.

The weekly stock chart is moving up nicely from 3 areas of support.  Prices are bouncing off the 11,250 support level, the lower channel trend line, and the 20 week moving average.  This bullish aspect is of course tempered somewhat by the slow trade of this holiday shortened week of trading.

The MACD indicator is still comatose, while the CCI and the stochastic indicators are showing some increasing momentum.  Frequently the MACD is delayed somewhat from showing an increase in momentum when an up move starts.  Let’s hope this is the case with the weekly MACD.

On the daily chart prices have created a new high at the 11,451 price level, 200 points above the 11,250 support level.  The CCI and the stochastic turned positive earlier in the week while the MACD is playing catch-up.

On the 30 minute chart you can clearly see the pullback when the new housing report was issued at about 10 am market time.  The market pulled back to below even and looked like a bearish move was going to take over.  But prices moved back up through the day and then consolidated during the afternoon.

The only bullish indicator on the 30 minute chart appears to be the stochastic.  The CCI and the MACD are looking a little weak.  So it wouldn’t surprise me to see prices under pressure a little bit tomorrow in a shortened trading day.

Trading Strategy:

Caution is still the watchword in this market.

Prudent investors should consider new long positions in markets that are going up.  Prudent investors should stay on the sidelines in markets that remain flat.

Aggressive investors should consider playing the market to the upside.

See our top stock picks email for bullish candidates.  

Stocks moved higher on slower trade today, fueled by two economic reports that increased optimism about the future of the economy.

A government report showed the economy grew in the third quarter, although more slowly than forecast.  Helping push prices even higher was an industry report that showed sales of existing homes rose in November to the highest level in three years.

Price increases are great, but be wary of the decreasing volume as we closeout the year.  Let’s review the stock charts for more market timing and technical analysis insights.

Stock prices on the weekly chart continue to move up from the support level of 11,250 settling at 11,412 at the close of today’s market.  Both the CCI and the PSAR indicator are bullish, but the MACD is still playing dead. 

On the daily chart prices are up for the third day in a row, although on decreasing volume.  Decreasing volume tends to reduce the strength of other technical aspects so this market is still very cautious.  A return to test the 11,250 support level cannot be ruled out.

Unlike the weekly chart, all 3 indicators, the CCI, MACD, and stochastic are showing a return to strength.

On the 30 minute chart once again you can see that prices moved up during the first hour of trading, fell back during late morning action, rose through lunch, fell in the afternoon and ended with a little flurry.  The momentum indicators finished in a mixed fashion with the CCI and stochastic moving up, the MACD showing weakness. 

This may indicate a mixed market tomorrow.  I wouldn’t expect any drastic move up or down during the balance of this week.

Trading Strategy:

If the market moves up during tomorrows trading more than 1% then prudent investors should consider new long positions.  See our top stock picks email for candidates.

Prudent investors should stay on the sidelines in the market remains flat.

Aggressive investors should consider playing the market to the upside on a market that is moving up.