Stock Market Update – Stuck in a Range

I first drew the trend lines on this chart at the beginning of the month, and the triangle pattern they depict holds to this day. Price once again has reacted to these trend lines and swing traders who trade in the very short term should be looking for short trading signals.

Position swing traders who trade in a longer term (such as 1-3 weeks) do not have a trend direction to trade with – so, in my opinion, they should revert to the next time frame up (the long term) and anticipate a sell-off.

Why so bearish? Observe the weekly chart and we can see that we are still clearly in the red. It will take a real trend change for price not to eject once again in a sell-off in this time frame. Let’s be realistic and not fight the tape. We are in a sharp down trend in this time frame and there is greater than a 50% chance that this trend will continue.

Stock Market Update

Is the Market Showing Hints of a Breakout?

I have been mostly bearish, but with a non-biased eye, chart reading may suggest stocks breaking up and out of their current range. Notice price congesting in the upper area of the symmetrical triangle. I wouldn’t commit to the long side here, but perhaps it is time to look for some longer-term position-type swing trades and growth stock breakouts etc.

The short term trend of the market is up. The medium term is sideways, and the long term is down. Align your swing trades accordingly.

Stock Market Update

The daily chart of the SPY (shown on the right – click to enlarge), continues to show the same picture. Stocks fell sharply in July, and have been moving sideways ever since.

Short term traders should be long, though with caution. We are approaching what might prove as resistance.

Medium term traders have it the toughest right now. At some point price will break – but which way?

Long-term traders and investors are looking at a down trend – as seen on the weekly chart (the 2nd chart – click to enlarge). This chart suggests that future movement has a higher probability of going down than it does going up.

So what direction should I swing trade?

I would say it makes sense right now to favor short set-ups in nearly every time frame. In these difficult conditions, however, I would suggest seeking set-ups and signals from swing trading strategies such as the Rubber Band Swing Trade Strategy. These types of swing trading strategies will make sure that you are trading with the current and relative trend for your time frame.

SPY daily (click to enlarge)

Stock Market Update

Stocks remain directionless in the intermediate time frame, up in the very short time frame, and down in the long-term time frame. Plan your trading and investing accordingly.

The daily chart shows stock continuing to trade in a range. More stock market trading update information to come this weekend.

Long-term investors and growth stock position traders should remain bearish.

Short-term swing traders have a tough call at this level as far as market timing and direction. Swing traders should trade their patterns accordingly with a bias toward the short side, though they should also be ready to change direction quickly. The 60-min chart of the SPY shows a wedging pattern that sometimes suggest an up-ward breakout is imminent, especially the way stocks took off this morning out of the gate. It’s OK not to be married to a specific direction. Look for support or resistance to be broken today, tomorrow or Thursday and then pile on trades in the appropriate direction.

Market News

New home sales hit 5-month low.

Head of S&P rating agency to step down.

AAPL to build a cheaper 8gb iPhone.

Crude oil up slightly at $84.50.