Technical Analysis | Stock Market Timing Signals | Top Stock Picks

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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Overall the broad market lost a scant 7 points, potentially increasing the likelihood for a bullish bounce after the holiday next Monday.

With about half of the months trading behind us the broad market is up about 50 points.  However, the market is down about 550 points from the beginning of the year, so buy and hold investors have a lot of catching up to do.  We have managed to avoid most of that loss and we’ll be ready to catch a new uptrend if one develops over the next week or so. 

On the weekly time frame the market remains in a down trend although technically the market is getting stronger.  The weeks trading activity has recovered the losses from last week and is up about 150 points from last weeks close.  This gain has been on lower volume so it remains to be seen how much upward strength will develop.

The CCI, stochastic, and MACD are all looking stronger on the weekly basis.

On the daily chart, stock trading today dropped sharply at the open and closed at the highs of the day but not significantly above the overhead down-sloping resistance line.  The daily CCI is very close to crossing over into bullish territory, as well as the MACD showing increasing strength.  The stochastic pulled back a little today.  Overall though the daily time frame also appears to be gaining strength so a bullish bounce next week is certainly an increasing possibility.

On the 30 minute chart the precipitous drop at the opening of trading is clearly shown.  The first 30 minutes of trading created a price drop of about 150 points but was not considered a down market day because prices did not drop further than the low created in the first 30 minutes.  Prices then continued generally up for the balance of the day with the last hour of trading moving prices back up close to the opening of the day.

Trading Strategy:

Unless some negative market affecting news is issued before trading opens on Tuesday, it is likely that prices will continue to move up next week. 

Aggressive traders should be ready to consider new long positions for short term profits if prices move higher than the overhead resistance at about the 11,050 level.

Prudent traders may want to wait until the weekly trend moves back to an uptrend before considering new long positions.

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.

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Much of today’s price increase may just be an expected reaction to the recent price drops.  Time will tell, but if recent history is any indication, one or two day rallies have been met with major selling activity.  We’ll wait to see what happens this time.

On the weekly time frame, stock prices have not moved much in either direction since two weeks ago.  It’s still only Tuesday so with more than half of the weeks trading ahead of us anything could happen.

On the daily chart, prices are about halfway between the lower support level and the down trend line drawn across the recent highs.  Today’s activity created a topping tail candlestick that creates doubt on the longevity of this up move.  Trading volume increased a little today but still below average. 

Although the momentum indicators are starting to show a little strength, a stronger up move with a pullback to a higher low would be needed to shift any bullish bounce into forward gear for a new rally.

Most of today’s action took place in late morning trading as shown on the 30 minute price chart.  Prices gapped up from the open then pulled back to the opening level.  The price increase during the morning was followed by a consolidation period and some profit taking during the last hour of trading.

Trading Strategy:

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.

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

Stock prices sank today with the popular press blaming the selling on continuing European debt worries.  The broad market lost a little more than 91 points or almost 1% of value.  The Dow closed below 10,000 for the first time in several months.

However, the fact that solid earnings growth being reported is not resulting in significantly higher stock prices may be the real reason for all the selling.  Remember the old adage, buy on the rumor, sell on the news.  The rumor – or expectation – of higher earnings has been the reason for the rally of 2009.  Now that increased earnings are here may be causing the selling.

With 64% (approx 320 companies) of the S&P 500, reported earnings so far this season, earnings are on track to have risen 207% when compared to last years results.  Revenues have gained 8%.  The big eanings jump in year over year results is partly due to easier comparisons to the tough fourth quarter of 2008.

The fact that these results are not driving prices higher is worrisome.

The weekly chart has the next support level established at the 10,500 price level.  This a round number and should provide some support on that fact alone. 

However, this price level also coincides with the high price level made during the second week of stock trading in October of 2008 which may also add support.  Unfortunately we also thought about the 11,000 level and it’s clear that 11,000 did not provide much support at all.

On the weeky chart, all three of the momentum indicators are clearly bearish.  The CCI has dropped below the -100 level, the stochastic is still accelerating downward below 20, and the MACD appears to be starting a long journey downwards.

On the daily time frame the support levels are drawn at 10,800 and 10,500.  Both these levels have faily significant consolidation action around them in the recent past.  Also, there is the downward sloping trendline across the top of last weeks trading and the high point achieved in January of 2010. 

When a bullish bounce occurs you can expect prices to at least reach this downtrending line, the only question is when will this happen.  We can’t predict but it is something you should be watching for and it likely will set up a new list of potential shorting opportunities.

On the 30 minute chart, prices tried to gain upward traction through the morning.  Afternoon trading started with a fairly sharp down move which was followed by a consolidation around the opening price level.  The last hour of trading brought more selling that resulted in prices closing at the lows of the day. 

Trading Strategy:

Today’s trading created a candlestick with a topping tail.  If this momentum carries over to tomorrows trading you could expect more price drops.

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.

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

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.

The current excuse is concern about the White House’s bank plan, Fed chief Bernanke’s future, and China’s lending practices.

Stocks lost almost 250 points today, or a little over 2% of value.  Trading volume was not quite as high as yesterdays, but still elevated from average.  This is likely to spell the death knoll for a resumption of this rally, at least in the near future.

So what are we doing now?  Right now we are sitting this slide out until the market moves up on a bounce, and then we’ll likely take short positions.

Let’s take a look at the charts for some more analysis.

Trading in January now shows a net loss of about 200 points.  It appears that the so-called  “January” effect – documented in many media outlets – may not be a valid justification for new long positions.

On the weekly chart, prices have fallen and closed well below the lower trend line, and also below the PSAR indicator, so the weekly chart is appearing to be entering a down trend.  The CCI is close to dropping below the zero line – and we really need these two events to occur for a confirmation of a new downtrend on the weekly time frame.

The daily stock chart is a disaster.  After a week of ratcheting back and forth at the top, prices have finally broken down and closed solidly below the prior low set in December.  On their way past the prior highs of Nov and Dec, the price action didn’t even pause.

Our momentum indicators are clearly bearish.

On the 30 minute chart, prices tried to hold a little below even for most of the day.  However, when traders returned from lunch it’s obvious that selling was the object of the day.  Prices fell sharply for the remainder of trading with the last hour of trading closing near the lows of the day

Trading Strategy:

If you were following the trading strategies described here then you probably managed to get out of profitable positions with most of the profit intact.  Any tightened stops were likely stopped out over the last few days of trading.

Next week I anticipate we’ll be watching for an opportunity to take short positions in this market.  Aggressive short traders may consider new short positions if the market continues down on Monday, however, the market is extremely extended to the downside so a prudent strategy would be to wait for a bounce back up to overhead resistance.

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.

Today’s market action moved another step closer to a trend reversal that I have discussed several times.  Stocks plummeted today from the outset as concerns about China’s lending hammered commodities and the broader market.  Additional reports showing a drop in manufacturing activity and a rise in jobless claims overshadowed improved earnings from Goldman Sachs.  Additional price drops occurred in the afternoon as traders and investors considered President Obama’s announcement regarding additional regulations on the nation’s largest banks and financial institutions. 

Total damage to stock prices today was over 200 points or almost 2% of value.  Trading for the month of January so far is about even with Decembers close.

A quick check of the weekly stock chart shows that prices fell firmly below the lower channel trend line.  Prices have not yet dropped below the PSAR indicator, but I suspect that it is only a matter of time before they do so, thereby creating another nail in the uptrend’s coffin.  The weekly momentum indicators are all heading for bearish territory.  Even the stoic MACD that has been flat since November is now showing life.  Unfortunately it’s going in the wrong direction for long investments.

The daily chart shows the same type of initial indications of a trend reversal as the weekly chart, just what we need to suggest a shorting strategy.  Prices dropped way below the lower trend line and closed at the lows for the day.  Prices are close to creating a reaction low below the lows of late December 2009.  The volume increase on yet another down day is continuing evidence of the big investment houses heading for the exits.  All three momentum indicators are now in bearish territory.

In similar action to Wednesdays trading, the 30 minute chart of today’s trading shows most of the losses occurred in the morning hours.  A downside gap in prices is additional evidence of institutional selling.  Prices managed a small recovery from the hammer candlestick created at 1pm.  From 2pm through the last hour, trading was all downhill.

Trading Strategy:

Continue to take profits and tighten stops on long positions remaining in this market.  Do not consider new long trades until the market returns to an uptrend.

It is still a little early to consider short positions in this market although we are getting close.  In order to justify short positions the weekly chart would need to be bearish (it’s not all the way there yet) and the daily chart would need to take a bullish bounce to a resistance level after closing below the lows set in late December 2009.

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.

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 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.  

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.

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. 

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.