Update - Stock Indices Remain in Bullish Technical Patterns

June 10th, 2013

by Dominic Cimino

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

This is an update for my commentary from April 25th, which was entitled: Stock Indices Remain in Bullish Technical Patterns. I'll continue to play the contrarian role since many appear to have written off further stock market gains. Actually, I'm not blindly bullish; but similar to April's conditions, stocks do indeed remain in bullish technical chart patterns. As I stated back then, textbook chart patterns are very clearly defined; and rather than entertaining divergences that seem to continue failing, or macro fundamentals that are certainly askew but may not govern market movement anytime soon, I suggest keeping it simple with a watchful eye on these patterns. Although headwinds still remain in place for U.S. equities, they continue to grind higher in these well-defined technical patterns.

The first chart is a daily bar of the S&P 500 Index. Support at the minor-minor trend channel (e.g. aqua blue) recently held yet again as the market trends higher in bullish trend channels of varying degree. The market's previous all-time high is the horizontal white line. Major resistance is present at the major trend channel resistance line (e.g. bold red), which comes into play in the low 1700s.

The second chart is an update of the Dow Jones Transportations Average Index's weekly bar chart. The enormous textbook inverted head-and-shoulders pattern remains in play, along with its tremendously bullish implications. The clearly defined bullish trend channel is highlighted by the parallel aqua blue trend lines.

The final chart is a weekly bar of the Russell 2000 Index. The bullish trend channel (e.g. in red) is again clearly defined, and the previous all-time high in white has been left behind.

In conclusion, U.S. equity indices continue to remain in bullish technical chart patterns. I believe these patterns should be respected. I also am aware of the macro-economic headwinds present, but I personally will not entertain a strong bearish conviction until failures of the patterns I have showcased present themselves.

Dominic Cimino

Chief Investment Strategist

Financial Advisor

Preferred Planning Concepts, LLC

2800 South River Road #240

Des Plaines, IL 60018

Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Preferred planning concepts, LLC & Cambridge are not affiliated.

© 2013, Dominic Cimino of Preferred Planning Concepts, LLC (You can explore the services offered by Preferred Planning Concepts by viewing us on our website at www.ppcplanning.com) Any redistribution, reprinting, or reference to this chart or content is allowed so long as reference to the author and source is acknowledged.

Important Disclosures

Please be aware that this is not a recommendation to purchase or sell any security. This is not a recommendation for any individual or institution to alter their portfolio holdings. Every individual or institution has its own risk tolerance and investment objectives and perspectives.

Any above opinions of the author should be viewed as such. These opinions in no way represent any type of guarantee. Realize that if you choose to invest in securities, investing in securities carries with it uncertainty and the risk of loss of principal. Lost investment opportunity is also a possibility. Investing in securities carries no guarantees.

Past performance is no guarantee of future results. The price movements within capital markets cannot be guaranteed and always remain uncertain. The above opinions are meant to stimulate thought and should be viewed as such. You are encouraged to discuss these views with your representatives if you have any questions or concerns.

Any indices mentioned are unmanaged and cannot be invested in directly.

It must here be mentioned that technical analysis offers no guarantees of future price movements. Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain.

Neither Cambridge Investment Research nor Preferred Planning Concepts is responsible for the accuracy of content provided by third parties. All material presented herein is believed to be reliable but we cannot attest to its accuracy.

All charts presented were made available by eSignal, a charting service available to individuals or professionals. Anyone interested in exploring the potentials of eSignal should give us a call.

Website by the Boston Web Company