X-Ray Vision

Don't you wish you could have X-ray vision? How great would that be to see through anything. Granted it wouldn't do anything for stock picking, but it would still be awesome. I would throw in some pictures, but I wouldn't want to get flagged for "inappropriate material." Plus, it just leaves more room for stock charts.

Before I start pasting up charts, I just want to reiterate why I think technical analysis is so important. In short, fundamental analysis along gives you a great rational picture of what is going on. Unfortunately, the market the market isn't always rational. Heck, it probably isn't rational half the time. The market is a mixture of fact and feeling. The feeling part is where technical analysis comes in. When you look at a chart, you have no idea if you are looking at a profitable company or not, but you can get a feel about how the investing public feels about the stock. Once you can work fact and feeling in together, you are set to starting making more rational decisions.

Now for some charts. Here's a look at the SP 500. I would show you the Dow, but I despise the Dow. (That was in another post.) Here's three observations, one per section of the chart. Once we passed south of the 70 RSI level we have risen and bounced back down off of 70. Next, there seems to be some resistance building around 1540. I know we are in uncharted territory and don't have any resistance above us, but it seems to be either stalling or pausing. Lastly, we have a divergence on the MACD, which signals a possible reversal.



Next - Dell. Dell has moved near overbought territory on the RSI chart so it will be interesting to see if it can break through 70 and move higher or bounce off and see the stock take a tumble. Looking at the last two candlesticks, we have very small bodies with a longer upper and lower shadow. 27.50 seems to be the upper boundary, but the candlesticks show some indecision. The MACD is essentially flat, with a slight downward bias. Given the chart, I would say that the upside is going to be limited for Dell in the coming weeks, unless, obviously, some great news is released (fundamentals!!).


Starting with the price chart, I don't see nice trend like in many of the other charts out there. It does look like it has been bunching at the bottom of a recent range so an upward movement wouldn't surprise me. The RSI has the overbought/oversold at about neutral.


Based on a previous post that I had, Honeywell has had an excellent correlation with the Dow over the past decade and shorter time frames. It spent some time overbought for a bit and now looks to have bounced off the 70 mark. Also, it looks like a double top is forming. The MACD is trending down and given the strength it has show over the past 6+ months, I would expect a bit of profit to around 54, if the broader market begins to soften.



For full disclosure, I own short Dell and long Intel currently. It is hard to follow either fundamental or technical indicators in this market. The rally has had such a broad base, everything seems to be moving up regardless of the fundamental news or technical chart setup. Good luck.