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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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. 

Stock prices dropped at the morning opening but recovered enough to close near the middle of today’s trading range, losing a little more than 20 points in the process.

The weekly chart is still marking time while traders figure out whether the next sharp break will be up or down.  All three of the indicators are pointing to down being the line of least resistance – at least for the time being.

The daily chart is creeping ever closer to the down trend line that intersects the 11,000 resistance level at just the correct position to line up with where you would expect a break to occur.  The descending triangle between the upper down trend line and the support level of 10,800 may lose some validity if prices continue to consolidate without a clear break to the up-side.

Trading volume dropped again today which normally can indicate a build up in pressure that will likely create a sharp move in prices.

The 30 minute chart shows the drop in prices that occurred during the early morning trading.  Prices then moved back up until after lunch when they moved slowly downward.  The last hour of trading did not produce a sharp move today.  The momentum indicators seem to show that a move to the downside is likely tomorrow if today’s trading momentum carries into tomorrows trading.

Trading Strategy:

Technical analysis shows there is a higher potential for a sharp move down than there is for a sharp move up.

Traders should continue to manage positions for maximum profits and tight stops. 

If the market moves above the upper trend line then long positions should be considered if the market continues to move up.

If the market moves below the 10,800 support level and continues down then short positions should be considered.

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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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.

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.

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.

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. 

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.

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. 

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.

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.