Technical Analysis | Stock Market Timing Signals | Top Stock Picks

Traders liked today’s reports on jobless claims and productivity numbers enough to push up stock prices approximately 200 points – over 2%.

However, market trading volume was dismal, casting a shadow on the potential follow-through of this move up.

Stock prices have now reached the resistance level of the lower line of the up-trending channel that has been defining this rally from the start.  Also at this price level you’ll find the convergence of the 20, 40, & 50 day moving averages.  This could be a defining level for this move up. 

Let’s take a look at the market charts for further technical analysis.

With 4/5’s of the weeks trading behind, us the weekly chart is shaping up to create a bounce from the 10,500 support level.  The CCI(20) is appearing to be finding a bottom although prices are still below the PSAR indicator.  So even though today’s move up may appear to confirm an uptrend, a breakout above the prior high may be a more prudent time to enter this market.

On the daily chart, stock prices regained all of yesterdays move and then some.  Trading volume was about the same as yesterdays and is relatively uninspiring.  Stock prices have clawed back to a rather formidable collection of overhead resistance as mentioned above.  A break through of this level would be a clear indicator that this move up has the momentum required to yield a profitable move.

The daily CCI(20) is moving upwards nicely but is not yet in bullish territory.  Prices continued moving up above the PSAR indicator for the second day in a row.

On the hourly chart, prices have closed above the upper down-trending channel line with the last two hours of trading moving up nicely.  Both the CCI(20) and the PSAR indicator are in bullish territory. 

Trading Strategy:

A little more work may be needed for prudent investors to become convinced that stock prices have demonstrated sufficient upward momentum to consider new long positions.  Aggressive investors should consider new long positions for their stock portfilio in markets that are increasing during the day.

Prices should hold above the upper trend line on the hourly chart prior to considering new long positions.  

What a difference a day can make! Today’s GDP announcement fired up the bulls today sufficiently to recover yesterday’s loss.

The real question is – will this move up in stock prices have any follow through?  Or will the reality of the unemployment levels and home foreclosure rate derail this rally?

Stock market action in the next few days will help define if long positions or short positions are likely to be more profitable for traders.

Let’s view the market charts for more technical analysis of today’s action.

With only one trading day left in October, it appears the monthly chart may end up with a classic indecision candlestick formation.  Stock prices during the month have so far reached a high of almost 11,250 and a low of 10,416.  If today was the last trading day, prices would have finished the month almost directly in the middle of this range.  It will be interesting to see how we finish the month tomorrow.

On the weekly time frame, stock prices dropped down to the support line and are currently creating a bottoming tail which could indicate future strength.  So far though, weekly results have been dismal with a 1.67% loss of value.  The CCI(20) is a little below the 100 line and stock prices are still above the PSAR indicator.

On the daily chart you can view what could be considered a bullish engulfing type of candlestick pattern which usually indicates more strength to come.  Although ideally a bullish engulfing pattern needs to “enclose” more of yesterday’s price range than was shown today, today’s action was certainly a strong recovery day.  The only caveat to the strength of today’s move up is the lack of convincing trading volume.

The daily CCI(20) is in bearish territory at a reading of -71.25.  Stock prices are below the PSAR indicator.

Today’s hourly stock chart is almost a mirror image of yesterdays.  Prices shot out of the gate at the opening bell and didn’t look back all day.  The last hour of trading created a bottoming tail which may carry strength over to Fridays trading.

Trading Strategy:

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