Saturday, June 9, 2012

Stock market looks okay for KI$$ investors - here's what to watch: technical charts

Notice I only said "okay" not screamingly bullish ... That's because there remain resistance levels the market must break above in order to confirm a true bull market. Those levels are marked on my charts below of the SPX and the Dow Transports. One example of an important level is 1360 in the SPX. And eventually, a true bull market would break above the 2007 highs like the Nasdaq did.

Don't forget that it remains possible for the stock market to make a lower low in the correction, so one place to watch in the SPX is the 200-day moving average, as well as the 1274 level. Also don't forget that it remains possible that even if the market pushes up to higher levels later this year, there are scenarios in which that could be just another peak that gets sold off into 2013 and 2014. So don't get complacent even if the markets do rally to higher highs.

Below are charts of the NYMO and bullish percent / SPX - two of my favorite indicator charts for KI$$ swings and investors. They both show marked improvement for the bullish case. No guarantee of course, just a basis for cautious optimism. Below that, a monthly SPX chart. Notice the bearish downtrending forkline trendlines - they are one reason why we must see continued higher highs in order to break those levels to be truly bullish. Otherwise, we might only see the market push up into a failed high. So don't get overly optimistic, and do continue to use stop losses and other trade management and money management!

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