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Stock Market Punches Through Resistance

Stock-Markets / US Stock Markets Jan 29, 2009 - 05:04 AM GMT

By: Kingsley_Anderson

Stock-Markets Best Financial Markets Analysis ArticleSo much for resistance. Both the S&P 500 and NASDAQ blew through resistance levels, including their respective 50 day moving averages. The DJIA was the laggard, unable to breach overhead resistance and the 50 dma.


The VIX also continued its decline. It closed below 40 again after spiking on January 20th and making a higher low. It is quickly coming down to touch its 200 dma at 36.28.

Based on this week's action, it was doubtful resistance would be breached. Volume had been decreasing prior to today's breakout. The one indicator flashing “go” was the McClellan Oscillator as it crossed the zero line on Tuesday.

Today's action, while encouraging, does not give the go-ahead to jump with both feet into the market. One nagging concern is that while volume was better than the last few days, it was not spectacular. Investors should not let “irrational exuberance” stand in the way of logical decision making and start chasing stocks. There will be plenty of time if a true rally kicks off.

The next area that needs to be surmounted is the 950 area on the S&P 500, the 1650 area on the NASDAQ, while the laggard DJIA needs to get above the 8400 area and its 50 dma. Investors also need to pay attention to which sectors may be leading and look for long candidates if a sustained rally occurs.


By Kingsley Anderson

http://tradethebreakout.blogspot.com

Kingsley Anderson (pseudonym) is a long-time individual trader. When not analyzing stocks, he is an attorney at a large law firm. Prior to entering private practice, he served as a judge advocate in the U.S. Army for five years and continues to serve in the U.S. Army Reserves. Kingsley primarily relies on technical analysis to decipher the markets.
Kingsley's website is Trade The Breakout (http://tradethebreakout.blogspot.com)

© 2009 Copyright Kingsley Anderson - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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