Stock Market Technical Analysis – Tech It Easy (thru March 20, 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NOTE: You may be reading an outdated article.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 | NEUTRAL (Downgrade vs 3 weeks ago)
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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 stay about the same over the next three months. |
Easy Notes: BarChart.com says that the price of SPY will probably stay about the same over the next three months. Two of three signals are at “buy,” and neither of them are strong. Fortunately, all three signals are headed in the right direction (the right direction would mean “buy” signals are strengthening and “sell” signals are weakening). Overall, this is a neutral assessment, barely worse than bullish.
Source: CXOAdvisory.com | BULLISH
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Quick ‘n Easy CXO Advisory Group uses technical analysis to project the earnings from the S&P 500 companies as well as the expected inflation rate. Using these two estimates, it provides a projection out to three months of the S&P 500 index. It is projecting about a 6.55% rise by the end of May 2015, which translates to about a 38.0% annualized rate of growth. |
Easy Notes: CXO Advisory Group uses stock market technical analysis to project the earnings from the S&P 500 companies as well as the expected inflation rate. Using these two estimates, it provides a projection out to about three months of the S&P 500 index.
The two most reliable models (REY-M and REY-L) for projecting 3-month movements project an average 6.55% gain from the current level by the end of May 2015, which translates to about a 38.0% annualized rate of growth. That is a sizzling pace and well above an average rate of growth.
Additional Info
I will estimate the forecast annualized growth rate from the projection. If it is 6 percent or higher, I’ll categorize as “bullish” – below zero will be “bearish” – and anything in between will be “neutral.”
Why does this source sometimes go against what the other stock market technical analysis sites are saying? It’s because this model assumes that stocks should be valued at a certain price based on their estimated future earnings and the rate of inflation. Wherever the current price is relative to that projected price is the amount it expects prices to change. So, if stocks take a tumble, it just means they have that much higher left to go to reach the targets that CXO believes they will attain. In contrast, when stocks rally strongly, it lowers the amount left to rally for the rest of the three month period.
Source: StockTA.com | BULLISH
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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 bullish” prospects. Expect the price of SPY to rise 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 bullish” rating.
Source: Price vs 200-day Moving Average from Finviz.com | BULLISH
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Quick ‘n Easy The price of SPY (which tracks the S&P 500 index) closed above the 200-day moving average – a bullish 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 the price of SPY is in the middle of two rising channels – a bullish situation. We will have to see which side of the channel it tests first. |
Easy Notes: SPY closed 5.41% above its 200-day moving average, which is generally considered a good 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 (1 bullish – 3 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 | BULLISH (Upgrade vs 3 weeks ago) | 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 (Upgrade vs 3 weeks ago) | Based on chart patterns, money flow and support/resistance analysis.
Easy Take
The S&P 500 surged by 2.7 percent this week. I haven’t done this feature for three weeks, so comparisons don’t make much sense this time around. The overall consensus remains “bullish” overall – though not unanimously as it was three weeks ago.
Out of the four stock market technical analysis sources I’ve mentioned, we have 3 bullish, 1 neutral and 0 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 2.75 out of 3 (versus 3 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 bullish outlook for the S&P 500 and, most likely, the market in general for the next 3 months. This outlook was bullish last time.
