Stock Market Outlook - S&P and a Volume Issue?
Here is your weekly recap of the S&P 500, and a look at what to watch next
week in terms of the overall market.
The market continues to march higher on a current wave which started back on
Feb 5. There have been complaints about volume...and this traditionally has
been a contrary indicator for upswings. What I mean is - declining volume
as prices continue to rise is often considered a negative or a sign the
market lacks conviction. I have actually written articles on using volume
(Stock & Commodities Magazine, June '08 is one example) to help in trading
decisions, and this is definitely something I have included in those
articles.
But, there is a caveat here. There are times when trading is just not that
attractive, regardless of the fact prices continue to march higher. The
average person, who lost money in the downturn and is now out of the market
is not going to feel like getting back in... possibly not for quite some
time. The pain is still real. So what is my point? Well, the volume and
price relationship is representative of the current participants. If we go
back a few years, our volume now would be average, even high.
Don't be fooled into making volume a primary indicator. It is a tool be
used in conjunction with price, not to anticipate price. It is also
important to note that higher volume will simply continue to push prices
higher (as they are now) OR it will bring a decline. Ultimately the best
thing for investors at this point it to hope that volume does not come back
in force.
Yes, traders are complaining a little, myself included, but in all reality
it is great for investors. Massive volume did nothing for investors in 2008
and early 2009. A resurgence in volume to the upside now, to me, will
signal mass speculation instead of methodical buying, and will bring about
another decline (with a push higher first most likely, leaving
late-to-the-party- investors holding the bag).
But enough about tools, let's talk about my favorite indicator - Price.
First off the average weekly range is just over 31 points. Thus it is
probable we will stay within 1200 and 1135 this week. It is also a shortened
trading week for so I don't expect a lot of volatility.
In terms of support, it comes in at 1161. A move below that is likely to
trigger selling and further support comes in by 1152 (this is also currently
where the uptrend line is, also providing support). If further selling were
to develop support comes in at 1147, 1140 and 1135.
1175 is the next point to watch on the upside from here. A re-test of that
area is likely to drive us back to the recent highs around 1180. Based on
the charts at this moment, if we move higher and break the highs, the target
is 1198. This may not occur this week.
Trend remains up. On the hourly chart I have marked the very short-term
downtrend which ended the week. A rise above that short-term downward
trendline indicates a renewed upward push.
Cory Mitchell, CMT
Vantage Point Trading
---
Analysis written by Cory Mitchell for CFDsPros.com
---
Risk Disclosure:
Trading on margin involves high risk and is not suitable
for all investors. The high degree of leverage can work against you as well
as for you before deciding to trade you should carefully consider your
investment objectives, level of experience, and risk appetite.
__________________
For information on stocks and real time stock quotes see CFDsPros.com.
Here is your weekly recap of the S&P 500, and a look at what to watch next
week in terms of the overall market.
The market continues to march higher on a current wave which started back on
Feb 5. There have been complaints about volume...and this traditionally has
been a contrary indicator for upswings. What I mean is - declining volume
as prices continue to rise is often considered a negative or a sign the
market lacks conviction. I have actually written articles on using volume
(Stock & Commodities Magazine, June '08 is one example) to help in trading
decisions, and this is definitely something I have included in those
articles.
But, there is a caveat here. There are times when trading is just not that
attractive, regardless of the fact prices continue to march higher. The
average person, who lost money in the downturn and is now out of the market
is not going to feel like getting back in... possibly not for quite some
time. The pain is still real. So what is my point? Well, the volume and
price relationship is representative of the current participants. If we go
back a few years, our volume now would be average, even high.
Don't be fooled into making volume a primary indicator. It is a tool be
used in conjunction with price, not to anticipate price. It is also
important to note that higher volume will simply continue to push prices
higher (as they are now) OR it will bring a decline. Ultimately the best
thing for investors at this point it to hope that volume does not come back
in force.
Yes, traders are complaining a little, myself included, but in all reality
it is great for investors. Massive volume did nothing for investors in 2008
and early 2009. A resurgence in volume to the upside now, to me, will
signal mass speculation instead of methodical buying, and will bring about
another decline (with a push higher first most likely, leaving
late-to-the-party- investors holding the bag).
But enough about tools, let's talk about my favorite indicator - Price.
First off the average weekly range is just over 31 points. Thus it is
probable we will stay within 1200 and 1135 this week. It is also a shortened
trading week for so I don't expect a lot of volatility.
In terms of support, it comes in at 1161. A move below that is likely to
trigger selling and further support comes in by 1152 (this is also currently
where the uptrend line is, also providing support). If further selling were
to develop support comes in at 1147, 1140 and 1135.
1175 is the next point to watch on the upside from here. A re-test of that
area is likely to drive us back to the recent highs around 1180. Based on
the charts at this moment, if we move higher and break the highs, the target
is 1198. This may not occur this week.
Trend remains up. On the hourly chart I have marked the very short-term
downtrend which ended the week. A rise above that short-term downward
trendline indicates a renewed upward push.
Cory Mitchell, CMT
Vantage Point Trading
---
Analysis written by Cory Mitchell for CFDsPros.com
---
Risk Disclosure:
Trading on margin involves high risk and is not suitable
for all investors. The high degree of leverage can work against you as well
as for you before deciding to trade you should carefully consider your
investment objectives, level of experience, and risk appetite.
__________________
For information on stocks and real time stock quotes see CFDsPros.com.