A Stock Market Basics Personal Viewpoint

On the positive side, it is an election year, which historically provides a profitable stock market, although this is still a time highly negatively impacted by the Eurozone financial problems and also potential crisis situations in the middle east. However, short term we should be ready to take advantage of an up-trading market that appears to be forming but subject to breaking through current resistance levels on improved volume (higher volume).

For the week commencing January 09, 2012, as a cautious small trader, I am watching the S&P 500 index (SPX), since it represents the broader market than does either the DOW or Nasdaq.

Right now, as can be seen in the chart below, it has paused at about 1280, just below the resistance level shown by the yellow horizontal line on the chart, having moved up gradually from the previous low just above 1200 around December 19 when we last posted the SPX chart here.

Chart of S&P 500 Index, as of 09 January 2012, 3:00 pm

Chart of S&P 500 Index, as of 09 January 2012, 3:00 pm

Still waiting
We were waiting then, and we wait now, but if the market can move higher and break through the present resistance level at about 1285 (let us say a close above 1300 would be a god sign, especially if accompanied by increased volume) we could reasonably expect some gains in the following weeks for stocks which have good earnings potential and some have already established breakouts through their own individual price levels.

Target
The target for the S&P Index would be to get back to the previous high of late April, 2011, around the 1370 level. There will probably be some ups and downs but that target seems realistic to me.

Learn about stock charts
That is why it is a good idea for beginning traders, who are learning the stock market basics, to learn as much as possible about stock charts and how to interpret, at least at a simple level, the price and volume activities the charts depict. What I mostly look for is a breakout from a trading range, or a breakout above a resistance level or below a support level. Most of those simple aspects are referred to elsewhere on this Stock Market Basics website, but there are plenty of other more detailed sources that can be found with a little effort.

Related posts:

  1. January Breakout Confirmed — An Update on the Stock Market for Beginners
  2. Is This the Breakout We’ve Been Waiting for?
  3. The S&P 500 Index Breakout We’ve Been Waiting For To Begin Paper Trading
  4. Waiting On The Sidelines for an S&P 500 Buy Signal
  5. After the Breakout, What Next ?
  6. Still Waiting on the Sidelines to Start Paper-Trading Portfolio Number 3
  7. Update While We Await a Breakout – October 16, 2011

Filed under: Stock Market Basics

Like this post? Subscribe to my RSS feed and get loads more!