Technical Analysis | Stock Market Timing Signals | Top Stock Picks

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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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.

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. 

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.