Sunday 8 September 2013
The point of reading developing market activity, as seen in charts, is
to eliminate any need to "predict" what may develop next day, week,
or month. There is no more reliable a source of information than the
market itself. Everything one needs to know is found within price and
volume activity, over time. If you know the market trend, and you
have some solid rules of engagement, profitable success is almost
The stock market has made historic highs, but there are questions
regarding its ability to sustain the upward drive during the natural
market-aging process. Last time, there was a discussion about rules
and a need for caution, [S&P And NAS - Best Offense Is A Good
Defense, click on http://bit.ly/1dAUwUB, if you missed it].
That has not changed within the question of, in the past week, has
the market changed?
The answer has to be yes because there has been more activity, but
recognizing how the market has changed did not get any easier. The
purpose of first identifying the trend is to be in a position of knowing
which trading rules to use as a guide. There are times when clarity is
lacking, and it is best to wait for the market to confirm its intent
before getting overly committed to the upside, or too defensive on
The overall structure of the weekly chart remains positive, and
continuation higher should be the norm until there is something
more to assess otherwise.
In trending markets, one wants to see synergy of various time frames,
but it is not there in this daily chart, relative to the weekly. The daily
trend has weakened. As an index, it is a warning for individual stocks
that are not showing profits, a was discussed last week. For those
stocks that are profitable, protective stops are still advised.
Friday was an important day for the up trend to reassert itself here.
There was a lot of volatility, and at the end of the day, price was little changed from Thursday's opposite performance of a very tight range.
The close was in the upper half of the bar, a plus, but there needs to
be follow-through on Monday because of where recent activity lies...
just under 1670 resistance, and also under a 50% range rally from the
recent high lot low. A market is considered weak when a rally cannot rise above a half-way correction area. These are negative signs and if
not erased by upside activity, the market can correct even further to
Perhaps the best hope for the S&P lies in the stronger tech-oriented
market, the NASDAQ. When price gaps up to establish is higher trading level, it is a sign of strength, and that gap has never been challenged.
The entire market, since mid-July has been consolidating and not
correcting. The difference is a sign of relative strength, for a
correction takes price lower in retracing recent gains from the last
Taken on its own, the NAS looks higher, and it may be the best
barometer for the S&P.