Update While We Await a Breakout – October 16, 2011

Forecast of future growth

After a good week for the S&P 500, as can be seen on the chart below, and the Alcoa announcement of a few days ago, Earnings Season has arrived.

While Alcoa’s quarterly earning were a little under the street’s reduced estimates,  they carried with them a positive outlook projecting future growth that could fuel stock market gains going forward. The chart tells the story to date where, for almost 3 months, the S&P has been confined to the trading range indicated between the two horizozntal green lines on the chart below, the uncertainties over the European debt situation have greatly contributed to the highs and lows of the period.

Conclusion
However, for small traders like us, it pays to be patient until we can see a confirmed breakout, either up or down, before re-entering the market. The charts will indicate when that occurs. Meanwhile, our Watch List/Trading List is still in force and valid for our future paper trading activities. At this time, the group of stock as a whole is currently showing an acceptable accumulated small percentage loss (1.1%) since it was initiated in September, but we know the list includes some very good stocks at depressed prices.

However, with the high volatility in the market of late, triggered by continued uncertainties on several fronts, our list may well show a much larger loss over the short term, although a series of good earnings announcements should help the cause, but generally it is hoped that the market will eventually breakout above the levels indicated on the above chart and provide good results into the end of the year.

Explanation: Why we Paper Trade stocks
The stocks in the list were assembled with a bullish bias, and are referred to here only as a learning device. Watching the stocks in real time as they trade over a period of time in this way, enables a newcomer to watch what happens as the stocks fluctuate in price but without actually having to participat using real money. Observing the stock market price fluctuations and seeing the trading price activity depicted in the form of a stock charts should help the observer to identify patterns that typically occur and tend to be repeated by other stocks at other times, the point being that some patterns tend to be indicative of future price movement.

Watching and interpreting the stock charts is sometimes referred to as ‘technical analysis’ although it is not a science or mathematical based activity, but for many who use the stock charts in this manner, it can be helpful in supporting decisions to enter or exit a stock position.

Our Stock Market Basics Paper-trading Portfolio
The Stock Market Basics Paper-trading Portfolio can be seen separately by using the computer mouse to click on the chart below. The chart is obtained from entries made on Yahoo.financ.com, and updated in real time on the Yahoo site with a 15 minute time lag. The data shown below summarizes the paper trading positions as of the close of trading on October 14, 2011. I find Yahoo Finance to be a very useful site for not only tracking a portfolio but also for obtaining up-to-date charts and news on individual stocks merely by entering their respective symbols in the “Get Quotes” box at to left of the display (beneath the HOME tab).

Related posts:

1. January Breakout Confirmed — An Update on the Stock Market for Beginners
2. Update of the S&P 500 Chart for March 25, 2011
3. Update of the S&P 500 Chart for March 19, 2011
4. Market Update, Week Ending April 01, 2011
5. Is This the Breakout We’ve Been Waiting for?
6. January 09, 2012 and Still Waiting for the Breakout
7. The S&P 500 Index Breakout We’ve Been Waiting For To Begin Paper Trading

Filed under: Stock Market Basics

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