Join        Login             Stock Quote

It's Friday, And Everyone's A Technical Analyst

 June 01, 2012 12:05 PM

by Michael Tarsala, CMT

Everyone is suddenly a technical analyst on volatile days with lots of negative headlines.

Don't listen to the intraday chatter, unless the person doing the talking is looking at daily and weekly closing prices.

There's no denying Friday's storm of bad markets news. A disappointing jobs report. Bad economic data from both Europe and China. A slide in the U.S. manufacturing data.

None of that came as a massive shock, though. There has been no big technical damage done in the long-term timeframe yet.

Volatility is rising again today, you bet. But investors need to keep some perspective. This is the chart that investors will want to watch:


[Related -Strong Attractor in Action Pulling S&P 500 Down]


 Source: Stockcharts.com

 We've been talking about the level marked by the black bars above for nearly a month now.

There's no hocus-pocus about it. It's simply a concentrated clump of past buying and selling. Those areas tend to act as magnets, pulling prices toward that area.

[Related -Energy Sector Rains On Bulls' Parade, but Skies May Clear Soon]

And that's exactly what happened. So a test of the "magnet" area is not a surprise.

A daily close -- and for investors, a WEEKLY close, below that key support area would be meaningful, and yes, more negative. There's not much volume support if prices slip below it, which could bring more volatility and more selling.

Will we see a breakdown?

I have a gut feeling it'll hold for now.

But if you're a long-term investor, just ignore my gut.

Watch the daily and weekly closing prices. And have a plan in place that takes into account a real turn for the worse.

If you have questions or if you want to make sure you have the right plan in place, talk to us. We can help.

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageCrude Rebound

Since the price of crude oil broke below $90 per barrel in September, the Brent global benchmark has been read on...

article imageShould You Invest In The Hottest New Trend In Finance?

Thanks to major changes in regulation, social media and technology, the business of banking has undergone read on...

article imageStrong Attractor in Action Pulling S&P 500 Down

The attractor is formed by the 200-day moving average and the 50% Fibonacci retracement of the up move from read on...

article imageIs The Weak Housing Market A Warning Sign For The US Economy?

Today’s US economic releases – housing starts and business survey data for the manufacturing sector – read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.