Stock Market for Beginners

Last week, we found that the market technicals looked bullish. This week, however, we had some indecision in the market. Investors have been hesitant about putting more money into the market at its all-time highs. This is a good sign as the hysteria that is so typical of the last leg of a bull run doesn’t seem to have hit us yet. See my crowd psychology series for more detail.

Stock Market Strategies for Beginners:

1. A new resistance level has formed at the 1560 level. This barrier was tested four times.
2. RSI is falling back to the 50 level. Look for a bounce off 50 and a healthy run up in the market. If not, we could be in for more losses.
3. We have support by both a trend line and the 50-day moving average at 1520.
4. Further support lies at the mid 1480s.

It seems as if we’re entering a critical junction in the market. The market showed it’s indecisiveness this week and could be ready for a big move in either direction. Here are a few insightful articles on the state of the stock market:

• Cracks in the Market Foundation - Brett takes a look at an increasing number of stocks with new lows being formed.
• Stock Market Trading Review Video - Brian narrates an excellent video on technical analysis and the current state of the stock market.
• Technical Market Report - Mike offers his short term and intermediate term technical analysis. He also goes into some Presidential Cycle analysis.
• The Bull Market Fights to Stay Alive - My own take on some reasons the bull market still has some fight left in it.

The common theme among these articles is that we need to be using proper risk management. While the market doesn’t seem to have reached its peak, we’ve entered a very volatile period where we could have a large sell off.

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