It is our aim as stock traders to trade with the dominant trend. We have looked at the business cycle and interest rates and how they can impact of the different phases of the market. We have also looked at business sector analysis to establish which industries tend to do well in the different market phases.

Now let’s look at some technical market indicators to help up confirm the dominant trend and more closely align it with stock market movements.

Have a look at our articles on Reading Stock Charts and Stock Trading Trends to gain an understanding of stock charts and trending.

To look at broad trends it is best to look at weekly charts of some of the main broad market indexes, such as the S & P 500 (SPX) or the NASDAQ Composite Index (COMPX).

Let’s have a look at an example:-

SP500 Weekly Stock Chart

Chart provided by stockcharts.com

Obviously you can clearly spot the continuing downward trend from the start of the period until March 09 when the market turned.

But lets also point out the MACD Analysis and as you can see this broadly illustrates the following:-

A Bull market is indicated when the MACD line is above the zero line and above the trigger line.

A Bear market is indicated when the MACD line is below the zero line and below the trigger line.

Dave J.

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