Stock Market Update

It's been awhile since I've posted on here so I fugured it's time for an update. Many of you have been writing to me wondering why I haven't posted on here for quite some time and the reason is simply because trading is my passion not blogging. Having said that lets get right to the charts.!

Above is a daily chart of the S&P 500. As you can see the market is now testing some minor resistance at 11.96. Volume hasn't been that impressive during this current 5 day rally which makes me cautious about buying into this up move.

Longer term cycles and seasonals  suggest that a significant low is due around this time of year which should kick start a rally into the end of the year. As most of you know the 4th quarter tends to be the most bullish time of year for stocks.

The big question is whether or not the seasonal low has been made on October 4th or will we see another move down which would wash out some of the weak longs who chased into the market over the past few trading sessions.

What I would like to see is for the S&P to make another move down to the lows at which point I will check to see if there is any strength or divergence taking place. In other words I would like to see the S&P make new lows but many stocks are not. If that scenario unfolds, I will get long but for now lets just take one day at a time and see what clues the market will reveal to us.

One other thing I'd like to point out is that today's trading range was one of the smallest ranges we have seen in weeks! Shot-term/day traders should be on alert for a possible large range trend day tomorrow.