Technical Analysis: Look to the Charts as Summer Unfolds

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Technical Analysis: Look to the Charts as Summer Unfolds

The question on everyone’s mind — will the rally last?

Profit Scanner powered by Recognia is able to look at the short-, intermediate- and long-term trends for stocks and indices based on technical analysis. The charts are showing that for the next few weeks to months, the trends for major markets are mixed, so traders may need to bob and weave among the indices and pick their positions carefully. Let’s take a closer look.

S&P 500: A Smooth Start to Summer

While summer naturally brings increased volatility because there are fewer participants in the market thanks to summer holidays, there are still identifiable trends that those who are trading can — and should — exploit. The S&P 500’s short-term chart for the next two to six weeks is filled with bullish signals and indicators as noted by the green dots (find a more detailed explanation of each item here).

SP500 shortterm Technical Analysis: Look to the Charts as Summer Unfolds

  • May 27: a short-term “Know Sure Thing” short-term bullish indicator appeared
  • May 23: a short-term bullish momentum indicator appeared
  • May 23: a short-term bullish MACD indicator appeared
  • May 22: a short-term bullish Commodity Channel Index signal appeared
  • May 16: a short-term bullish Commodity Channel Index signal appeared
  • May 7: a bullish double moving average crossover of the 21-day moving average and 50-day moving average occurred

The intermediate-term picture (the next six weeks to nine months) is a bit more vague for the S&P, with only two bullish events occurring in recent sessions.

SP500 intermediateterm Technical Analysis: Look to the Charts as Summer Unfolds

  • April 18: a bullish price cross above the 21-week moving average
  • May 30: Intermediate-term bullish MACD indicator

While Profit Scanner continuously uncovers new technical signals each day, looking at these charts alone could suggest that traders could use the strength in the next few weeks to lighten up on big-cap positions that are overweighted while maintaining some skin in the game.

Nasdaq: A Pullback Ahead, But How Will You Use It?

The tech-heavy Nasdaq has had a rocky start to the year, and the charts indicate the turbulence could stick around — at least over the next two to six weeks — as three bearish signals have appeared on the Nasdaq’s chart in recent trading, including two back-to-back bearish Hanging Man patterns.

NASDAQ shortterm Technical Analysis: Look to the Charts as Summer Unfolds

  • June 3: a short-term bearish Commodity Channel Index signal appeared
  • June 2: a bearish Hanging Man pattern appeared
  • May 30: a bearish Hanging Man pattern appeared
  • May 30: a bullish double moving average crossover of the 21-day moving average and 50-day moving average occurred
  • May 23: a bullish Williams Percent Return signal appeared
  • April 25: a “Know Sure Thing” short-term bullish indicator appeared

A Hanging Man pattern tells traders that an instrument’s price may have reached the top of the recent uptrend, showing it has been susceptible to selling pressure.

The intermediate-term trend for the Nasdaq appears more mixed, hinting that the index may turn around and resume an upward trend … or could just as easily plunge.

NASDAQ intermediate term Technical Analysis: Look to the Charts as Summer Unfolds

  • May 23: a bullish price cross above the 21-week moving average occurred
  • May 22: a bullish price cross above the 50-day moving average occurred
  • May 2: a bearish triple moving average crossover of the 4-week, 9-week and 18-week moving averages occurred

Stay nimble with tech holdings, and wait for confirmation of any trend before using pullbacks to add to positions or to sell off.

An Undecided Dow

Dow 16,000 seemed unthinkable at the end of a tumultuous 2012, and yet the index has continued to push ahead to new highs even in the face of some challenging economic and global factors. While some are calling for the index to break more records, others are concerned about exhaustion. Unfortunately, the Dow’s charts don’t seem to point to clear short-term trend, either, as noted by the mix of red and green bullish events.

Dow shortterm Technical Analysis: Look to the Charts as Summer Unfolds

  • June 4: a short-term bearish Commodity Channel Index signal appeared
  • June 3: a bearish Hanging Man pattern appeared
  • June 2: a “Know Sure Thing” short-term bullish indicator appeared
  • May 30: a short-term bullish Commodity Channel Index signal appeared
  • May 30: a bearish Hanging Man pattern appeared
  • May 29: a bullish triple moving average crossover of the 4-day, 9-day and 18-day moving averages occurred
  • May 28: a bearish Inside Bar pattern appeared

The Dow’s intermediate-term picture is just as muddy.

Dow intermediateterm Technical Analysis: Look to the Charts as Summer Unfolds

  • May 23: an intermediate-term bullish MACD indicator appeared
  • May 21: a bullish moving average cross of the 50-day moving average occurred
  • May 16: an intermediate-term bearish Engulfing Line pattern appeared

None of these signals should be looked at in a vacuum, as technical analysis does not consider impactful geopolitical events or fundamental information. But if your other research leads you to a certain conclusion about a market or a specific security, technical analysis is a great tool for validating your findings.

Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.


Article printed from InvestorPlace Media, http://investorplace.com/2014/06/technical-analysis-look-charts-summer-unfolds/.

©2014 InvestorPlace Media, LLC

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