Stock Market Daily Charts Still Favorable....Long-Term Charts Are Not....

Stock-Markets / Stock Markets 2015 Jun 04, 2015 - 10:04 AM GMT

So what do you trust more? In the very short-term I have always followed the short-term charts over the longer-term charts. You try to follow the most trustworthy index charts and they can be found on the daily charts. Weekly and monthly charts seem to take too long to use for your short-term trading. They'll kick in at some point, but it's too unpredictable. So if we use the daily charts you can see those key-index oscillators are in good shape with the MACD stochastic's and RSI all out of overbought territory. The room is there on all of the oscillators if the bulls can make the move. None of those key oscillators would get overbought until the triple-top breakout at S&P 500 2134 was long gone.

The past several times we got near a key breakout level above the S&P 500, the oscillators were high. They had the chance for breaking out anyway but were unable to do in this particular environment. Now we look at them and see room so will the bulls take the gift? That's tough to say as froth is still out of control with the bull-bear back in the mid 30's, but that hasn't stopped the market before. It could now but hasn't in well over a year now, so let's remove that for the moment. It may simply be that the market has come too far and just won't be able to get the job done for the bulls, but the room is there, so things are getting very interesting. It may be more hope than anything else since this market is so boring and we're all hoping for something special, but there is no doubt that the room is there. I would love this market to make a huge move even if it's lower. Just take away this monotony. We shall see what we shall see, but at least the bulls know the room is available. No overbought excuses here anymore.

You know the numbers by now. They don't lie and when they get broken you have to be sure how they get broken is appropriate before taking action. For instance we saw the S&P take out 2119 for a double-top move, but we then had to deal with a grinding move higher, which didn't bode well for the breakout holding or rocking higher with force. If we take out 2134 for a triple top breakout you shouldn't get too excited, unless when it happens it happens with force and on increasing volume. 2137 on low volume will probably lead to more chop and disappointment by the bulls. Conversely, if we sell hard, and if we lose 2040 on the S&P the bears need to see the same volume increase and price drop far below that level, or they, too, will probably get disappointed.

Making a move initially does not guarantee good results. The move must be accompanied by big money supporting the breakout or breakdown. If it's all retail players making the move they usually are doomed to fail again, whether it's a move up and out, or a move down and out. 2040 and 2134 are those two key levels and are separated by nearly five percent. A huge area to work within. The range is not usually this big when dealing with key levels, but sadly that's the case here. All the noise in between is exciting, and then disappointing folks. Creating a load of emotion that isn't usually good for traders. Adapt to the situation so as to not allow emotion to be the key decision maker for your dollars.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

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