Best Financial Markets Analysis Article So 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.

Kingsley Anderson Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.