Mixed Signals

Looks like the stock market is giving us mixed signals at this point. On a positive note the recent low is holding (see the lower horizontal line) and is acting as support. The upper line shows an area of resistance. Previous blogs talk about support and resistance so read back. If support is broken then look out below and if resistance is broken then maybe we will see an upside move. It is likely that a move through either of these lines would be accompanied by volume showing the conviction in one direction or the other. Again in the past I mentioned we get our best up days in a down trending stock market. Recently we have had some wonderful up days only to be end up as traps for the impatient investor. The problem with these up days is that there is no volume. We want to see high volume up days after which we can consider buying. For the moment wait and be patient until the stock market shows its hand.


Graph courtesy of http://www.bigcharts.com/

I have added a page “rules for trading” (see the tab) so my readers can quickly look back at some of the important rules I talk about.