The following is a predominantly technical analysis view of what to expect to in the stock market in the upcoming wee (Dec 7-11).  We will use the S&P 500 as our reflection of the market.  This can be used by day traders, swing traders or investor to gain insight into what is unfolding, what to expect and what to look for.

Intra-day traders saw large and swift moves occur this week.  If an hourly chart of the S&P 500 is pulled up for Nov 10- Dec 4, we see a range which is peppered with aggressive buying and selling into the extremes and then pulling back off the levels and heading to the other side.

Something very interesting to note is that on 3 consecutive days (Dec 2, 3, 4, always early in the day) the market went above the previous swing high, triggering stops and buy orders, and then pulled back into the range.  The lack of conviction above 1115 indicates this market is not likely to move aggressively higher…and if and when it does it will be in the new year.

This does not mean we won’t see tradable moves above 1115, but with circumstances right now -  volume light, global risks, disconnects between intermarket relationships- this area is a danger zone until volume picks up and we successfully break above this area, move higher and then on a pullback successfully hold that level.  In other words, patience will be required.

Massive moves are expected in all the following major markets: currencies, commodities and the stock market (bonds too, but I don’t focus on them too much).  We may have started to see this on Friday.  How easily we jump from bubble to bubble.  What catalyst sets off the fireworks is yet to be determined.

But lets’ move to focusing on the actual technical levels of importance:

In the upside, 1115-1120 is a resistance area determined my multiple false breakouts.  I would use at least a two point buffer above this level.  As mentioned above, with light volume I much prefer not to trade the breakout but wait for the breakout to falter and then short the market as it falls back through the resistance area (that is not advice…that is simply what I am watching for).  If a legitimate breakout does occur, even on light volume it can scamper quite a ways.  Targets are 1123, 1128 and 1131.

On the downside 1096 is important.  A move through there takes out the Friday low and would successfully close the window (gap) opened on Dec 1.    Such a move indicates a movement to test to lows of the range.  1087 is the most likely target followed by 1085.

A drop below 1080 (using a buffer below the lows) would punch us out of the range we were in.  The target for that breakout is 1055 which is just above a hourly trending support line (going back to Sept).  There is important interim support which will provide us with other signals during the week.  There is little support, in the event of a break downwards, until 1072.  This is the top from a gap that occurred back in early November.  The low of the gap is 1070.  If that gap is closed by new price movement it is a bearish sign and prices are expected to continue to chart lower into the 1068-1064 area.  Support also comes in at 1060, therefore it will take fierce action to reach 1055 if in fact this market does break lower.  This is because the average weekly range for the S&P is just over 37 points, and the market closed on Friday right around 1106.

Trade with the trend, but don’t become attached to it.

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Cory Mitchell, CMT
Chief Market Strategist
-Know your risks when trading. Please read the Legal Disclaimer page.

The following is the stock market outlook, using the S&P 500, for the week of Nov 30, 2009  – Dec 4.  This analysis can be used to help in day trading or swing trading decisions, as well as for investors to gain technical insight into the current market.

Events like which occurred on Wednesday, with Dubai World saying it would not be able to pay it’s debt, are the type of events which will be the catalyst for this market going lower.

Technically this market rally is on shaky ground at these levels.  We have divergence on multiple time frames, not to mention inter-market divergence (markets moving contrary to the general relationship).  Divergence can last for a long time and is a not a trading signal in itself, but when news such as that of Dubai World is released, hardly ever does it come alone.  There are still many systemic problems, and no matter how much money is thrown at a problem, traders and investors still get scared.

Right now the trend is still up, and should be traded as such, but be cautious.  Support is Friday’s low at 1084.  A drop below that would punch us out of the range we were in.  The target for that breakout is 1055 which is just above a hourly trending support line.  There is important interim support which will provide us with other signals during the week.  There is little support, in the event of a break downwards, until 1072.  This is the top from a gap that occurred back in early November.  The low of the gap is 1070.  If that gap is closed by new price movement it is a bearish sign and prices are expected to continue to chart lower into the 1068-1064 area.  Support also comes in at 1060, therefore it will take fierce action to reach 1055 if in fact this market does break lower.

The average weekly range for the S&P is just under 37 points, and the market closed on Friday right around 1091.

If the upcoming week brings rainbows and butterflies, here are the levels to watch on the upside:  To move higher the first resistance point is a short term level at 1100.  We also have resistance at 1105 followed by1108 and 1110.  Beyond this are recent highs in the market, right around 1114.  A break above that indicates another upswing.  Volume should be rising if this occurs, but so far this market rise has not occurred on large volume, so look for volume to at least remain steady.  A decline in volume on a breakout is likely to result in a failed signal.

Targets beyond 1114 are 1118,  1123, 1128 and 1131.

Trade with the trend, but don’t become attached to it.

My friends over at INO are currently offering 4 free online video seminars from master traders via the link below.  After that you can decide if you wanna see more… INO TV is the only place where members have access to over 150 experts and 500 hours of seminars, for one price. INO TV gives its 30,000 members access to massive amounts of educational material that has been handpicked to provide you with the most for the least.

Find out what makes INO TV the right place for you.

Cory Mitchell, CMT
Chief Market Strategist
-Know your risks when trading. Please read the Legal Disclaimer page.

The following is a look at what can be expected in the stock market in the upcoming week, Nov 23-27.  We are looking at the S&P 500 .  Keep in mind the market is closed on Nov 26 and it closes early on Nov 27.  So we are looking at an abbreviated trading week.  Volume has already been light and has been declining since the march lows, but more recently has been declining since the end of October.  Expect volume to be quite light this week, especially Friday.

Monday set a false tone for last week.  We broke above the 1107 level mentioned in last weeks post.  The ride to 1118 should have been smooth sailing, but there was really no buying above in this region.  Selling was not that strong either, until Thursday.

On Tuesday when we couldn’t make new highs, but made new lows we had an indication that the market was likely to head lower.  Volume is also a factor in this.

This past week gave us very clear support and resistance levels. Here is what to look for:

A rise above 1098 is likely to cause a pop back to 1102-1104.  This is where former support, now resistance, comes into play.  That range that held most of the price action through early last week is now going to act as a ceiling.  If it climbs higher than that, expect more range bound trading between 1104-1113.  With the light volume we may see the market pushed around and may see a spike above the high, but unless it is accompanied by large volume the break is very highly likely to fail.  The market getting above the highs this week is not probabilistically high though.

The upside target is still 1118, but I am very leary of trading long up in that area unless it is for quick scalps.  UNLESS, once again volume makes a come back….from my keyboard to God’s ears.

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On the downside we have support at 1086-1084.  A break below indicates a move to 1076.  Below that watch how it reacts around the gap of 1072-1070.  A closing of that gap is bearish and indicates further selling.  A gap below that along with a close would be even more bearish.  Further support is at 1065 and 1060.

I will trade what the market gives.  But personally I do not believe this market is a buying opportunity.  In fact I think the wool has been pulled over the publics eyes and that this market and the economy are in serious trouble unless serious changes are made…and those changes cannot include more spending, incentives or pushing the consumer into more debt.

Trade in the direction of the trend but do not become attached to it.

Cory Mitchell, CMT
Chief Market Strategist
-Please read the Legal Disclaimer page.

On the hourly chart the trendline is still rising.  We managed to reach former highs last week, but could not sustain the momentum to stay above that level.  We do have some solid levels in the upcoming week which will give good indication of where this market is going if those levels are moved through.

On the upside we have resistance from 1100-1105.  We have seen multiple failures in this region.  Obviously we need to get through this area if the market is going to head higher.  A break above 1107 would indicate strength and that we are heading for another swing higher.   The target for the move is 1118 followed by 1130 if the former level is exceeded.

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http://www.ino.com/info/447/CD3784/&dp=0&l=0&campaignid=6 ~~

We have support at 1085.  A sustained break below that indicates a move to test 1072.  This is the profit target based off the last swing high-swing low, substracted from the low. This is also where the gap up on Monday occured.  If that level holds expect a move back higher, but if that gap is filled and we hit 1070 it is a bearish sign and prices overall are likely to head south.  Support is likely at 1065 and then 1060.  Breaks of those indicates a further move to 1052.

Cory Mitchell, CMT
Chief Market Strategist
-Please read the Legal Disclaimer page.

While the market did try to push lower, it did not get below the 1029 level (which as mentioned in last weeks post) would have indicated a strong bearish bias if the level was broken.  That level was brushed by the market but quickly retraced higher.  We have moved up and closed right at the resistance level of 1070-1073.  This is a pivotal level.  If we can move above and hold above it for a day, this would indicate another swing higher.

On a move higher, resistance/targets are 1077 and 1085.  Moves beyond that will challenge former swing highs at 1091, 1095, and ultimately 1098-1100.

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http://www.ino.com/info/447/CD3784/&dp=0&l=0&campaignid=6

The average range for a week on the S&P right now is about 40 points.  This means if the market does collect steam as it moves above 1073 it is well within the grasp of the market to reach the 1100 mark once again.  Targets/resistance beyond is 1105 then 1111-1113.

There are still warning signs this market is going to correct, thus we need to be aware that a move below 1065 indicates the possibility of a pullback.  A pull below 1065 indicates a move to 1062, with a further move down testing 1060-1058. The bias shifts downward if 1058 is penetrated.  This would signal a move to 1047-1045.  Further target/support would be at 1036 and then once again 1029.

Cory Mitchell, CMT
Chief Market Strategist
-Please read the Legal Disclaimer page.

The sham of a GDP number (see: http://vantagepointtrading.com/archives/2055 ) gave false optimism on Thursday ; the reality of the situation is more congruent with Friday’s action.  But let’s look at the technicals:

Rallies on the S&P 500 in the upcoming week can be expected to experience resistance at 1042 and if that fails to hold then 1061.  A rise beyond that in the current climate is unlikely, but is (small percentage) possible.  A rise above 1070 would signal this market has plenty of buyers (or short coverings) and is good for another move higher.

Even Chuck Norris is short....but I am not gonna tell him.

If Monday trades through 1032 it is likely the market will continue lower, although this is not really an important technical level.  A continued move below 1029 points to a test of former swing lows at 1020 and then beyond that 1005-1000.

Based on a daily chart trendline the uptrend was still intact until Friday.  A down day on Monday indicates the trend has in fact been broken and we are due for a larger correction.

Happy Trading,

Cory Mitchell, CMT

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Well, that was quite an exit to today’s trading day!  The Dow pulled back 150 points from the afternoon trading range  in the final thirty minutes.  Reports said that a downgrade in the banking sector is what caused the sell off.  Well, who knows, but it wouldn’t surprise me.  The banks have so many toxic assets on their balance sheets that unequivocally another wave of destruction is coming in that sector.  The “mark-to-myth” problem continues to get covered up and problem continues to grow.  But that is an issue to address another day.

Today let’s look at a broader benchmark:  The Nasdaq

The major indexes have made some interesting moves lately, but the NASDAQ is at an interesting spot as pointed out in this new video (link video here). So check out the video and see if the NASDAQ will effect your portfolio or trading.

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

The video was recorded yesterday, and after today’s sell off late in the day the indicators which were pointed out become even more powerful.  Learn a little about candlesticks, Fibonacci levels and divergence.

Enjoy the video from Adam and Ino, as always, it is free.

Cory Mitchell, CMT

The market has reached an interesting point, which means it is time to look at this market again. In previous analysis I mentioned a target of 1000, and 1020. The second profit target should have actually been 1025. My bad. Either way, both were exceeded slightly and we have had a close at 1030-1031. Therefore the profit target from the breakout of the range, which lasted from May through July, has been achieved.

Now it is time to see if this market has more steam. I am still skeptical of this rally. Fundamentals don’t seem to be matching up with the market, but that is why I am technical trader/analyst. The market is providing opportunities and we need to trade them no matter what our personal belief might be about what is happening.

From the chart you can see I put a small trend line on this last leg of the rally. This is not a critical trendline, but since it intersects the profit target area it is given a little more credibility. Being that we have exceeded the profit target, a point where we expect to start to see diminishing strength, if we drop back below that trendline it indicates we are a likely to experience at least a short-term reversal.

A rise and close above 1031 indicates another swing higher. IF that were to occur targets at 1065 and 1100.

Downside targets are 980, 950 and 920.

S&P 500 Daily Chart

~Cory Mitchell, CMT
Chief Market Strategist
Remember, failed breakouts are tradeable too!

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P.S.  Want more trading education?  Get 4 free trading seminars here:

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Be Sure to check them out as well!

——————————–

Today’s short video is something quite special.

In many of the previous videos we’ve looked at charts using Japanese candlestick charts. While this is interesting, we’ve never quite explained to you some of the powers behind using Japanese candlestick charts.

So here’s what we are going to do; watch the video, and Adam will point out to you some powerful Japanese candlestick formations on Google, Gold and Crude Oil.

http://www.ino.com/info/433/CD3784/&dp=0&l=0&campaignid=3
ALSO, MarketClub is making available to you with just a phone call a very special PDF booklet on Japanese candlestick charting.  The title of the booklet is “17 Moneymaking Candlestick Formations You Can Use Today”.

So enjoy the video this video from Adam.  It is always great content.

http://www.ino.com/info/433/CD3784/&dp=0&l=0&campaignid=3

Best wishes in your trading,

Cory Mitchell, CMT