Stock Market Technical Analysis – Tech It Easy (thru September 25, 2015)
Stock market technical analysis is all you need to know, complete hogwash or somewhere in between. It depends on who you ask. If you find it interesting, you’ll probably like reading this weekly feature.
NOTE: You may be reading an outdated article. Please visit my latest stock market technical analysis summary of the S&P 500 for more.
I used to have screenshots of the various stock market technical analysis assessments I present below, as well as a bit more analysis for each one. In order to save time, I will not be doing the screenshots and will abbreviate some of the text for each analysis as well. The last time I did a comprehensive analysis can be foundhere, in case you want to see what it looked like.
The next few paragraphs are my standard intro to stock market technical analysis – you can skip down to the table (or click “continue reading”) if you read this feature regularly:
Many people who trade in the markets believe that there are patterns that can generally lead to profitable trades. By analyzing stock charts that show the change in price along with the volume (how many shares were traded), “technical analysts” believe they have an edge and can time their trades profitably. There is significant controversy over this subject, however. Others say that, unless you have some information that no one else does, basically you can never beat “the market” because everything is already baked into the current price of a stock.
Nevertheless, supporters of stock market technical analysis are everywhere, and the tools for their trade can be found throughout bookstores and the Internet. I like to follow some websites that do some of the work automatically and provide a snapshot opinion of whether a particular stock is considered “bullish” (going to go up in price), “bearish” (going to go down in price) or “neutral” (stay about the same price).
For simplicity, I’d like to start by showing you a snapshot of what several stock market technical analysis websites suggest about the exchange traded fund (ETF) with the ticker symbol of SPY. This fund is supposed to go up and down the same as the S&P 500 index does. And many people consider the S&P 500 index (a measure of the price of the 500 largest companies that trade in the U.S.) to be an accurate gauge of where “the market” stands.
For each of the sources below, where I have a choice, I will use a measure that attempts to predict the future direction of SPY or S&P 500 in the next 3 months.
S&P 500 Technical Analysis Summary
Source: Barchart.com | BEARISH
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Quick ‘n Easy Barchart.com uses three analyses to predict the direction of SPY over the next three months or so. Looking at the average value and strength of these three signals, we can conclude that BarChart.com thinks that the price of SPY will fall over the next three months. |
Easy Notes: BarChart.com says that the price of SPY will probably fall over the next three months. All three signals are at “sell” right now, and only one of them is a weak signal. Unfortunately, one of three signals is headed in the right direction (the right direction would mean “buy” signals are strengthening and “sell” signals are weakening). Overall, this is a bearish assessment.
Source: StockTA.com | BEARISH
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Quick ‘n Easy StockTA.com provides stock market technical analysis by analyzing numerous different technical indicators and combining them into a composite rating for either short, intermediate or long term. We are focusing on the long-term, and right now it says that SPY (which tracks the S&P 500) has “very bearish” prospects. Expect the price of SPY to fall over the next three months. |
Easy Notes: StockTA.com provides its stock market technical analysis by analyzing numerous different technical indicators and combining them into a composite rating for either short (30 days), intermediate (60 days) or long term (120 days). We are focusing on the long-term so it is as close to 3 months as possible.
The long-term is currently at a “very bearish” rating.
Source: Price vs 200-day Moving Average from Finviz.com | BEARISH
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Quick ‘n Easy The price of SPY (which tracks the S&P 500 index) closed below the 200-day moving average – a bearish assessment. Moving average is a good signal by which to judge the momentum of a stock’s price. Finviz provides other stock market technical analysis tools, which right now show that SPY is not particularly close to any resistance or support lines. |
Easy Notes: SPY closed 5.74% below its 200-day moving average, which is generally considered a bad sign.
Additional Info
Moving Average – take the average of the closing price (last price of the day) of the last “X” number of trading days. In this case, we used the last 200 trading days, which is a common time frame for analysis.
I will base the rating of this section purely on the 200-day moving average, not the other tools that I mention from the site. Those will only be used for additional commentary.
Stock Market Technical Analysis Summaries – Additional Sources
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Quick ‘n Easy Several other sites provide an overview of the stock market technical analysis of SPY. They don’t have a clear 3-month time horizon, so they aren’t included with the rest of the analyses above or in the calculation at the bottom of this page. Overall, these analyses of SPY are indicating an average neutral stance (0 bullish – 4 neutral – 0 bearish) right now. |
Below, I will mention a few other sites’ stock market technical analysis of where things stand with SPY or the S&P 500. I don’t include these in my calculated average at the bottom of this page, however. This is because these other sources don’t necessarily look at a 3-month time period for their forecasts. But it’s nice to see what they are saying to get a sense for the consensus view.
Source: AmericanBulls.com | NEUTRAL | This site uses stock market technical analysis for the last few days of trading only, using the opening price, closing price and up/down movement of the day to make a prediction. That information is translated into a series of “candlesticks” that technical analysts believe can show patterns that correlate with ups and downs.
Source: TradingMarkets.com | NEUTRAL | The “PowerRatings” system analyzes all kinds of quantitative data to forecast the price for the next 1-5 trading days, but it’s a proprietary method of stock market technical analysis (i.e., a “secret”). It probably includes a lot of analyses that other sources on this page also use.
Source: StockSelector.com | NEUTRAL | No signal was issued recently.
Source: StockConsultant.com | NEUTRAL | Based on chart patterns, money flow and support/resistance analysis.
Easy Take
The S&P 500 was down by 1.4 percent this week – and it’s down 6.2 percent for the year. The overall consensus is “bearish” again.
Out of the three stock market technical analysis sources I’ve mentioned, we have 0 bullish, 0 neutral and 3 bearish. If we were to average these using 3 points for “bullish”, 2 points for “neutral” and 1 point for “bearish,” we’d get an average of 1 out of 3 (versus 2.33 last time). If we split the interval between 1 and 3 (which are the minimum and maximum we could get as an average) into three equal parts, that means the following:
1-1.666 = Bearish
1.667-2.333 = Neutral
2.334-3 = Bullish
Right now, the several indicators I’ve chosen to follow suggest a bearish outlook for the S&P 500 and, most likely, the market in general for the next 3 months. This outlook was bearish last time.
