Technical Analysis | Stock Market Timing Signals | Top Stock Picks

Stock prices gained today on the eve of the Big Report Day. 

The big report day is the monthly employment report that is scheduled to be issued about an hour before the market opens tomorrow.  There was a smaller report issued today that indicated the pace of job losses is slowing.  However, expectations are that tomorrows government employment report will show employers cut 65,000 jobs in February, an increase from 20,000 in January.

Many economists are claiming that the increase in job losses can be attributed to snow days across the country.  Even if that is true, how anyone will be able to spin a report like that as anything other than negative for the future of the economy will be interesting to watch. 

The bottom line is that an increase in job losses means less money for consumers to spend.  I wouldn’t want to predict how the market will react to whatever the report says, but I’d be willing to bet that volatility tomorrow will be high.  It might be a great day just to watch.

Many media outlets are screaming that the Dow is “positive” for 2010.  That is little solace if you bought at the “high” of 2010!   If you bought at the high so far this year you’d be underwater.  However, if the media outlets can raise some interest in buying stocks that would be great because trading volume continues to be dismal – and getting worse.  Trading volume continues to decrease on up-days, not an encouraging sign.

Prices on the weekly chart continue to approach the old high set in mid-February.  A move above this high will be important for confidence to return to this market.  The momentum indicators continue to strengthen somewhat.

On the daily chart prices appear to have stalled somewhat underneath the overhead resistance at the 11,600 level.  Breaking through this level might create some momentum to create an assault on the 2010 high mark created in January.

The MACD indicator is continuing at a high level and if you compare how long prices have been oversold on this cycle with the length of prior cycles it’s not difficult to be concerned about some sharp down days to come.

Trading Strategy:

Friday is very likely to be a high volatility day so it’s difficult to recommend a strategy until the day’s trading plays out. 

However, some guidelines can be established.

If the employment report comes out equal to or better than expected and stocks are rising above the high set in the first 30 minutes of trading then new long positions could be considered.

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The weekly trend remains up but the daily trend is starting to look a little overbought.

The weekly chart is still moving up with the momentum indicators gaining strength.  The trading volume is really going to have to pour on the steam to technically have an increase in volume if this weeks trading ends on an up-note.  If trading volume falls it could add to the uncertainty of this rally.

On the daily chart today’s trading created a topping tail candlestick.  Prices ended up close to the up sloping trend line as shown on the chart.  Prices really have not accelerated from the lower trend-line as we would like to see on a strong uptrend, so caution is still advised.  Stock prices may be encountering some difficulty breaking through the overhead resistance at around the 11,600 level.

Trading Strategy

Although the weekly uptrend is in sync with the daily uptrend, caution is advised on taking new long positions in this market.

Suggested trading strategy is to consider new long positions on market up-days. 

The momentum indicators are showing that the market is a little extended here so be careful of new positions with too much risk.

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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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Stocks prices rose today but gave up much of the day’s gain as the afternoon turned to profit taking.  Driving prices up today was news about company mergers and signs that Greece won’t default on its debt.

The Dow Jones Industrial average finished the day just above unchanged.  The S&P 500 index added 2 points, or 0.2%, the Nada rose 7 points, or 0.3%.  The broader measure of the stock market added a little more than 36 points for a gain of 0.32%.  The broader index is a more accurate measure of market performance.

Although March trading is only two days old, the monthly chart appears to be gaining strength.  If prices can move above the overhead resistance at the highs of last October the momentum – and trading volume – may increase.

On the weekly chart prices continue to move up from the PSAR switch of last week.  The CCI has moved into positive territory and if prices can hold here for the rest of the week the market timing signal would move from cautious to up.  All three of the momentum indicators are gathering strength.

On the daily chart, today’s trading created a topping tail which may indicate weakness in the short term.  An encouraging aspect of today’s action is the increase in volume.  Although closing well of the highs for the day, an increase in trading volume on a market up day is a welcome sight. 

The 30 minute chart shows the price increase during the opening 30 minutes of trading.  Prices then moved up until the early afternoon when sellers became more aggressive.  The last half hour of trading move prices back up modestly.

Trading Strategy

Suggested trading strategy is to consider new long positions on market up-days. 

The momentum indicators are showing that the market is a little extended here so be careful of new positions with too much risk.

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

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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Not much noteworthy news today but the market was ready to go up, at least for the short term.  In the news today was AIGs $35 billion asset sale, two mergers in the pharmaceutical sector, and hopes that the Greek bailout package may indeed become a reality.

The weekly stock chart appears to have resumed its upward trek.  Prices appear prepared to move above the mid-February high and also move above the psychological 11,500 level.  The CCI has moved into bullish territory and the stochastic and MACD appear to be moving up also. 

If the current numbers on the weekly chart were at the end of the trading week then the weekly chart would be even more bullish.  However, there are 4 trading days left this week and anything can happen, but for now the weekly trend and the daily trend are lining up in the upwards direction and the time is right to consider new long positions.

On the daily chart prices moved up sharply from the lower support trend-line.  Prices didn’t even stop for a breather at the old February high, or the overhead resistance at 11,400.  The momentum indicators are moving to the positive side.  The only downside is the lack of volume.

Trading volume continues to decrease.  Take this as a warning sign that this rally may be fickle.  Be ready to tighten stops and take profits, down drafts may be sharp and powerful.

On 30 minute chart prices moved up throughout the morning, paused for the balance of the day, and moved up again during the last day of trading to close at the high for the day.

Trading Strategy

Suggested trading strategy is to consider new long positions on market up-days. 

Get free, no obligation access to the real-time stock charts  used in these posts.

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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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Stock prices fell this week after digesting a steady stream of worse than expected news on the economy.  It’s quite surprising that the weeks loss wasn’t larger given the constant barrage of disappointing news.  The broad market wrapped up the week losing almost 50 points or a little more than 0.42%.

Investors and traders considered dismal news on the housing market, jobless claims, durable goods orders, and consumer confidence.  During the week, concerns about Greece’s debt crisis resurfaced like the monster in a bad horror flick that comes back to life.  It appears this monster may linger for a lot longer than anyone originally anticipated.

However, we need to remember that the stock climbs a wall of worry when prices are going up.  And the fact that prices didn’t drop further this week may indicate an underlying strength that may surface soon.  It’s too early to go short, but long positions have yet to be justified.  So we’ll wait until the market comes to us with trading opportunities.

On the weekly chart prices ended the week with a bottoming tail.  Trading volume was up for the week.  So the bullishness of the bottoming tail might be considered cancelled out by the increase in trading volume on a down week.  The CCI and MACD momentum indicators are fairly flat and the stochastic has dropped.  All things considered the weekly chart is sending mixed signals.

On the daily chart today’s trading created a sort of indecision candlestick.  Prices today remained below the PSAR level which indicates that long positions are risky.  The CCI looks like it is gaining strength, the stochastic is at least holding to the current level, but the MACD is still showing overbought.

The 30 minute chart shows the choppiness of today’s trading.  Prices look a little extended to the upside and ripe for a pullback, but there is a lot of time between today and the opening of trading on Monday.  Weekend news can change the investing picture a lot.

Trading Strategy:

Traders should watch for market strength before considering new long positions.  If the market moves above the daily PSAR and continues up then long positions would be appropriate.

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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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Stock prices posted huge losses out of the gate at the morning bell but recovered somewhat by the close of the market.  Investors and traders reacted to the Greek debt situation and dismal economic news, including disappointing factory order numbers and worse than expected jobless claims.

The Dow lost 53 points, the Nasdaq lost 1.68 while the S&P500 lost 2.31.  The broad market lost 61 points.

On the weekly chart, prices are holding above the 11,000 support level.  Prices are above the PSAR indicator and the CCI is just below the zero level.  Movement of the CCI above zero is considered bullish territory but remember that price and volume are the primary technical indicators.

With one more day remaining in this trading week volume has already exceeded last week’s volume.  If the week ends with a loss on higher volume it is another cautionary sign that this trend may accelerate to the downside.

The weekly stochastic turned down and the MACD is flattening.

On the daily chart the market action today produced a huge bottoming tail, not unlike the bottoming tail formed during the latter part of the first week of trading this month.  However, the difference between that day of trading and today’s is that today’s price level is still somewhat extended to the upside.  So although a rally based on today’s action cannot be ruled out, it is less probable than at the beginning of the month.

Trading volume increased today on yet another down day overall.

On the 30 minute chart you can clearly see the drastic drop in prices at the opening bell.  Prices created an opening gap that was closed late in the day.  This is considered a technically strong move.  Most of the price recovery occurred during the last hour of trading.

Trading Strategy:

Traders should consider new long positions only on market up days.  Even markets up days are an elevated risk given the volume concerns. 

Because prices on the daily chart have moved below the PSAR indicator, consider tightening stops and taking some profits.

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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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Stocks fell sharply today in what hopefully will be a controlled consolidation but may well turn out to be the beginning of a longer pullback.  The news cited for this downturn in prices was the drop in a key measure of consumer confidence.

However, investors are also searching for evidence of fundamental strength in the overall economy and they are coming up empty handed.  The employment picture is not improving as quickly as many has hoped, home prices continue to fall, interest rate jitters have been increased as a result of the Feds latest move – overall there isn’t a lot to be excited about – and a lot of profits to capture.

But regular readers will recognize this underlying nervousness as a reflection of trading action over the last few weeks.  Prices have been rising on ever decreasing volume – an almost sure sign of big players dumping shares. 

On the monthly time frame the picture is looking like the tide is starting to turn down.  Prices really started to meet some headwind at the mid 11,000 level. 

On the weekly time frame, prices recently moved above the PSAR indicator but the balance of the technical indicators are not supporting this strength.  All the momentum indicators have appeared to stall in bearish territory and a new 2010 high appears unlikely – at least in the near future.  This could quite possibly set up a longer pullback or a renewed down trend.

On the daily chart, prices have dropped below the lows of the recent uptrend line.  Trading volume today increased from the recent 5 or 6 days of trading volume on up days.  All the momentum indicators are at bullish extremes and appear to be moving down.  Whether they progress into bearish territory or this pullback can turn into a less damaging consolidation is yet to be seen.

On the 30 minute chart you can see that most of the downturn in prices occurred in the morning hours.  The balance of the day was fairly choppy trading action with some increased selling taking place during the last hour of trading.

Trading Strategy

Prudent traders and investors should tighten stops and take profits where present.  No new long positions should be entered until this pullback demonstrates some support before a lower low is made.

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

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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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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Stocks ended a choppy session mostly lower today.  Today’s trading created a clear indecision candlestick chart on lower volume.

No major news items were issued that could have created a strong move in either direction.

To start off the week, stock prices on the weekly chart moved above the PSAR indicator just like we suggested they might last week.  The CCI also moved above the zero line.  If today’s results were for a full week of trading, the signal chart shown below would be more bullish on the weekly trend. Unfortunately this is not the end of the week so the weekly down trend assessment remains in place. 

Trading volume remains a significant concern.  Trading on the weekly chart is clearly dropping on weeks that prices moved up.  This has happened for the last two full weeks of trading.

As a sort of confirmation of weakness on the weekly chart, none of the momentum indicators are showing any real strength improvement.

Prices on the daily chart formed an indecision candlestick on lower volume.  With prices extended on the daily chart it appears time to let the market define when to take new long positions. 

Trading Strategy:

View our free market timing signals  ,  stock trading strategies  , and stock trading forum .

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

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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The fed raised the emergency bank lending rate after the market closed yesterday and stock futures had tumbled overnight, pushing stocks lower at the open.  But the knee-jerk reaction to any news of an interest rate hike wore off during the day as investors and traders considered the hike a minimal impact to borrowing costs for consumers or businesses.

However, it is inevitable that interest rates will have to rise at some point in the future, but for now this interest rate hike is not hugely meaningful.

With one week left for trading in February it appears likely that the monthly up-trend will continue to be under pressure.

For the weekly trend, stock prices need to move up only 64 or so points to move prices above the PSAR indicator.  As discussed earlier in the week there is nothing really magical about this event but it does serve as a confirming indicator that a trend change is in the works. 

With the weekly momentum indicators gaining strength, a move above the weekly PSAR and/or a move of the CCI above zero is possible this week, pushing the weekly trend to bullish.  However, the market timing chart below will only change at the end of the week, so keep this in mind as this weeks trading unfolds.

On the daily chart, stock prices have been in a solid up-trend for the past two weeks and broke through the resistance level at 11,000 without much hesitation.  Trading volume today was a little higher than any day this week but not high enough to remove the trading volume cloud from our strategy.

Combine the lack of trading volume with momentum indicators at a high level and you have reason to be watchful for a pullback in prices this week.  Prices may move up, but this bounce is ready for a consolidation that could set up some great swing trades.  As usual, let the market deliver the profitable trades to you, don’t take unnecessary risks.

On the 30 minute chart prices didn’t really start moving up until late morning.  The last hour of trading produced a little topping tail.  Overall, today’s trading was a mild profit taking day.

Trading Strategy

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

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.

Sample 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 at the subscription page.

View our free market timing signals ,  stock trading strategies , and stock trading forum.