Market Timing often is given a bad name because many investors refuse to check their charts at the close and open every day. The close is important as it is the moment to reflect on the previous day and compare market timing technicals and market direction from yesterday with today’s close. The open of each day is important because many of the market timing technicals give an indication at the close of the previous day about what to watch for during the opening of the next day.
For example, yesterday’s market timing indicator, the candlestick warned that the market was bumping into resistance. Indeed for much of today the market direction was sideways and the S&P was negative for much of today. But the key for today was that the S&P 500 still opened higher than yesterday’s close. On Dec 5 2011 the S&P closed at 1257.08. Today, Dec 6 2011 the S&P opened at 1257.19 which was higher than the close.
As a market timing indicator, candlesticks are unconcerned about the difference in the figures. Instead it is just the figure itself and today’s open was higher than yesterday’s close. Next up is today’s close. Was it higher than yesterday’s close? Indeed it was. We closed at 1258.47. The candlestick for today can be seen below and it indicates that the market direction remains up.
Market Timing / Market Direction Moving Averages
As a side note, 3 trading sessions earlier, the 20 day EMA (exponential moving average) has crossed the 30 day moving higher (you can see this in the chart above). The 10 day SMA (simple moving average) is swinging back up as well but has yet to cross the 20 and 30 day EMA. Moving averages have been a market timing tool for decades. Select this market timing link to read more about moving averages.
Market Timing Indicators Show Market Direction Is Still Up
Below, once again are my 4 main market timing indicators. I am presently not including the McClellan Oscillator but suffice to say that there were 3,686 decliners and 3,287 advancers. This is a sign not of decline but of resistance as the market tries to push higher. Select this market direction link to read more about the McClellan Oscillator.
Remember the market timing reading from yesterday was the market direction was up as the S&P tries to push higher.
Here is today’s market timing technical indicators charts.
Market Timing Indicator Slow Stochastic (top indicator)
The slow stochastic is up again from yesterday. At 84.21 it is getting more bullish with each passing day. The stochastic indicators were created back in the 1950′s.
Market Timing Indicator Ultimate Oscillator
The Ultimate Oscillator is continuing to climb into positive territory with a reading of 58.85 which is higher than yesterday.
Market Timing Indicator MACD (Moving Average Convergence / Divergence)
MACD. With a divergence reading of 5.31 ia also higher than yesterday.
Market Timing Indicator Rate Of Change (bottom indicator)
Of some significance today is the Rate of Change market timing indicator as it has turned up with a reading of 1.74.
Market Timing / Market Direction Overall Summary For Dec 6 2011
All my market timing indicators have improved since yesterday and each day for the past few trading sessions they are following the market direction higher. With the rate of change market timing indicator now turning positive, there is a good chance the market can continue to advance although most likely slowly.
If the news out of Europe this week should even be remotely seen as positive, the market timing indicators are all warning that the market direction could remain decidedly positive and break through resistance into the end of the year.