Friday saw aggresive moves, as the market opened lower and rallied furiously…only to finish the day basically unchanged.

The lows of the day came very near the short-term upward trendline, showing there is still support above 1070, as the S&P 500 hit a low around 1088.  The trendline crosses currently at 1086.

The stifled rally early this week shows signs of weakness.  From the rally off the bottom, 1010.91, if this were infact going to turn into a broader advance the wave higher we saw from the middle of the month should have extended further.  The fact it couldn’t indicates that we are lacking steam. The bounce off the bottom, the pullback, and then a resurgance higher should have brought additional buyers into the market, not to mention some short coverings.  That did not materialize.

Yet, the fact the market stayed above the support levels must also be respected. Primary support is at 1055 (just above), but a close next week below 1095 would provide some early indications the advance is in trouble.  Some additional support comes in at 1070-1062.  Failure to hold there means a highly likely re-test of 1056 and a further slide from there.  The 1055 can be used a pivot point – trading drops below it for further downside, but also watching for false breakouts (trading moves back up through it) due to the choppy nature of this market and the large intra-day moves.

Below 1055 little support comes in until 1033, 1016 and 1010.  The average (14) weekly range for the S&P is 59.55 points, and the market closed at 1101.60 on Friday.

A further advance is indicated by a move above 1122.  A former swing high lies beyond at 1132.  Pushing beyond this area clears the air, at least technically, for the market to run.  Minor resistance is at 1140, with more significant resistance at 1156.

Chart is below.

Have a great weekend!

Cory Mitchell, CMT

And while you are enjoying that weekend, check out this video if you haven’t already…

I have to admit, this is a little weird.

It’s a video that reveals a story about the #1 reason why most people lose money trading stocks…and how the “story-teller” himself was ultimately able to help those people make a life-altering “shift” in their trading.

Why do I say it’s “weird”?  Maybe because it’s about stuff most people are afraid to admit about themselves & their trading. Check out this “weird” stock trading story here:

http://www.stockmasterymaterials.com/y/?u=2&i=1083859&l=f1

As you immerse yourself in the story, see how close it is to YOUR trading story…

(pay close attention)

Good Trading,
Cory Mitchell, CMT

p.s. Do you think it’s “weird”?

http://www.stockmasterymaterials.com/y/?u=2&i=1083859&l=f1

SP-500 Daily, FreeStockCharts

~Know your risks in trading.  See our Legal Disclaimer page.

It appears that the offer pulling may be working as this market once again breaks above resistance on falling average volume.  On Friday the S&P 500 broke above 1100 signaling another potential wave higher.

A large triangle was broken by Friday’s move, as well as the downward trendline extending down since late April.

Given that the market is able to stay above 1070 (currently at 1102.66), these chart patterns provide us with several upside targets.  Initial target is 1140.  If followed by another wave it could push the index into 1190-1210.

While it appears the bulls may have the upperhand over the last month, volume continues to be suspect.  Also, as day traders likely have noticed the movements intra-day while strong in price often lack punch – generally being moved more by offer pulling than actual buying of the book offer.  Of course it is not wise to stand in the way of this, the short-term trend is up and can continue to be for some time.

At this time the levels to watch below where we are currently are: 1070-1060.   A close into this area from where we are now would signal a false breakout to the upside.  A close below 1060 would confirm signaling a re-test of the recent swing low at 1020.  A close below that low has a target of 970.

The chart at the bottom shows the inside levels to watch providing a visual depiction of what is unfolding.

This may be the ugliest video about stock trading I’ve ever seen…but the message in the story is worth it.

It’s about how a regular guy discovered 1 “unusual” trick in trading the stock market…and how he was finally able to get an “edge” over everybody else – other traders & even his own broker – after years of trial & error.

Watch it through to the end here (it’s worth it):

http://www.stockmasterymaterials.com/y/?u=2&i=1083859&l=f9

Good Trading,
Cory Mitchell, CMT

~Know your risks in trading.  Please see our Legal Disclaimer page.

Before I get into the S&P analysis, here is a quick video from the other day which covers the NASDAQ.  The NASDAQ was strong compared to other benchmarks on Friday.  The video was recorded a couple days ago but is still valid and has some great content…always educational and informative.

Is the Nasdaq in Thin Air: http://www.ino.com/info/466/CD3784/&dp=0&l=0&campaignid=3

OK…and now to the S&P analysis for the upcoming week.

The markets tested the 1100-1100 area this past week, and have so far failed to push above it. While Friday was a down day, the Thursday lows held and we saw strong buying into the close, showing traders are still reluctant to head into the weekend on the short side.

The trend is still higher, but the market is losing momentum. This has been apparent on the RSI for some time, but despite lower highs on the RSI the market has pushed higher overall, therefore a divergence is only worthwhile once we see a break in price. The divergence does signal a weakening and warrants some caution on the long side.

Friday’s trading formed a bearish engulfing pattern on the daily chart, coupled with the fact it occurred at a pivotal resistance level, it does indicate a pullback. Again, price will need to confirm. A drop below 1073 (especially a daily close) would confirm at least a short term retracement.

A move below 1073 is likely to target 1050-1045. A drop below 1040 would break daily trendline support, but further support is likely by 1020. A drop below that level indicates a larger move down.

Since we are waiting for price to confirm, another move higher is still possible, but not as likely as a move lower. A move above 1102 will target 1111. A break above that will target 1125-1130.

Happy Trading,

Cory Mitchell, CMT