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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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.  

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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.

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Trading Strategy:

Yesterday’s strategy noted that cautious positions should be considered if prices are moving up and above the high made in the first 30 minutes of trading. 

Today’s market action contained two opportunities for new trades based on this strategy, one at the 10 pm reversal time and one in the middle of the afternoon.

If the broad market continues up tomorrow then traders should cautiously consider new long positions from the top stock picks email.

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

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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.

In a reversal of yesterday’s loss, today’s trading almost makes up for the loss experienced yesterday.  Stock prices were up a little over 100 points today or almost 1%.  Traders appeared held back by aggressive selling of commodities and oil stocks.

Does a one day reversal mean you should jump right back into this market

Probably not, although depending on the market action tomorrow you may want to consider new long positions in well chosen stocks that are already in uptrends.

On the weekly chart today’s action has created an indecision week so far.  So although today’s price increase is welcome, a return of the rally is not ensured.  The MACD appears to be heading higher, but the CCI and the stochastic are flat to lower. 

The daily chart certainly shows the rebound of stock prices from yesterdays down day, although the entire loss was not eliminated.  Prices are still below the PSAR indicator so we are still cautious about taking new positions in this market until that changes.

The daily CCI and stochastic recovered a little based on today’s action.  The MACD is looking weak but could turn back up if this rally continues.  Trading volume decreased today when compared to yesterdays action.  Although this is not a major red flag, higher volume on down-days than on up-days is not a good sign.

On the 30 minute chart, prices moved up nicely at the opening bell only to be pushed down for the remainder of the opening hour.  Prices then moved up the entire day but ran into a little bit of resistance at the level of yesterdays high.  The closing hour of trading ended up with a topping tail that may cause some lack of momentum for the early going tomorrow.

Trading Strategy:

If the broad market continues up tomorrow then traders should cautiously consider new long positions from the top stock picks email.  Here are several indications of an up-market:

• Prices above the high set in the first 30 minutes of trading

• Prices continuing to move up

• All three of the major indexes are moving up – Dow 30, Nasdaq, S&P500.

The Wilshire 5000 would need to move above a level of 11760 to trip the PSAR indicator to a bullish mode. 

VTI would need to move above 58.35 before the model portfolio would be re-invested in VTI.

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

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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.

Stocks certainly took it on the chin today right from the opening bell.  Alcoa announced disappointing earnings after the close of the market yesterday.  Alcoa’s dismal news combined with Chevron’s profit warning and the fact that prices have increased for 6 days straight through last Friday, made a correction a high probability.

The question is will this current pullback remain a consolidation at the current price levels or will a deeper correction transpire?  Technical analysis of the stock charts is not encouraging.

Yesterday, we also mentioned that the weekly chart was having difficulty building upwards momentum from the lower trend line.  In fact, with today’s price drop, the weekly chart is in danger of dropping below this trend line.  Prices are getting perilously close to dropping below the PSAR indicator which would not be good news.  The three momentum indicators are looking weak also.

On the daily chart all three price momentum indicators dropped today.  The stochastic and CCI are close to dropping below zero.  Stock prices dropped below the PSAR indicator which is a prime reason to tighten stops and take profits.  Trading volume increased.

On the 30 minute chart prices dropped sharply in the morning, dropped more until after lunch, and then recovered slightly.  Trading finished the last hour of trading with a hammer candlestick – which may add some momentum to tomorrows opening.  But remember, even if it does, one day does not make a trend.  We’ll need to watch for strength to return to at least the daily chart before considering new long positions.  And this assumes the weekly chart remains positive, and that doesn’t look good right now.

Trading Strategy:

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

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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.

Earnings are hoped to be good this reporting period but improvement statistics are likely to be skewed by the extremely low bar established on earnings reported a year ago.

The weekly stock chart is having a hard time in following up from the rally last Monday.  Looking at the chart you can see that prices have not moved up very much from the lower channel trend line.  Although it’s early to judge where this week will end up, momentum on the weekly basis seems to be suffering a little.

The weekly MACD is just starting to look up after being flat for 11 weeks or so.  The stochastic and CCI are at least holding their own. 

The daily chart shows the price increases of the last 6 days.  In conjunction with the weekly chart, prices are looking a little weak.  The stochastic indicator is turning down while the CCI is flat, and the MACD has stalled somewhat.  This may point to some weakness in the near term.

On the 30 minute chart you can see the run-up in prices at the opening bell.  Prices immediately reversed in the first 30 minutes of trading to a loss and then recovered to the opening price level.  Prices then drifted down until the last hour of trading.  The last hour of trading pushed prices modestly higher for the day but trading finished with an indecision candlestick, perhaps pointing to an increased possibility for a pullback during 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 although caution is advised.  This means that prices are above the prior days close and above the high created in the first 30 minutes of trading.

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.

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.

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.

Stock prices continued to churn for the second day after the big run-up earlier in the week.

The weekly stochastic and CCI indicators continued their move up with the MACD remaining flat.  With over half of the trading week in the history books the weekly candlestick is still showing a solid move up.  However, two days are left in the trading week and all eyes are focused on the broader employment report due out on Friday.

Let’s go to the stock charts for an indepth technical analysis and market timing assessment.

The daily chart showed some churn in the market today with traders and investors considering weakness in the tech and telecom sector along with signs of a more stable job market and services sector.

The CCI and MACD on the daily chart continued their move up while the stochastic fell slightly.  Trading volume fell from yesterday but is right in line with average volumes.

The choppy trading can be seen clearly in the 30 minute chart.  Prices fell at the open, and then recovered a little bit, only to flip-flop above and below the zero line all day.

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.