Technical Approach that Outperforms the Stock Market

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Technical Approach that Outperforms the Stock Market

Many people aspire to use the “buy and hold” strategy, but often their “buy” phase begins when the stock market is in a strong uptrend, driven by euphoric news and widespread bullish sentiment. This typically coincides with the market reaching overheated conditions. Consequently, the “hold” part of their strategy tends to be postponed once the market starts to decline.

Technical analysis helps investors to time the market. Yes, it is possible when you are disciplined and can manage your emotions. The following chart for the highlights clear reversal signals using the monthly chart.

The red arrows on the chart point out indecision candles that have consistently preceded significant stock market corrections. The first instance marked led to the 2018 bear market, followed by the COVID ******, then the 2022 bear market, and most recently, the 2025 tariff war. While the chart contains other indecisive candles, those specifically highlighted were followed by declines that pushed the price below the 5-month moving average, as indicated by thin arrows.

Simultaneously, as shown by ****** arrows in the sub-chart, the Stochastic oscillator crossed below the 80 level, confirming that overbought conditions had dissipated.

Regarding the Relative Strength Index (RSI), its overbought threshold is 70. A key warning sign, known as divergence, occurs when the RSI sets lower highs while the price itself continues to set higher highs – a condition that typically foreshadows pullbacks.

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Similarly, bullish reversals are highlighted by green arrows, representing bounces from the 50-month moving average and bullish candles that either bounced from that level or formed a bullish setup, as seen in September 2024. The sub-chart also features an arrow indicating the Stochastic oscillator crossing above 20, which validated the bullish reversal following the 2022 bear market.

While looking at the chart in hindsight makes it appear logical, living through its real-time movements – listening to news or social media, watching futures during extended hours, and constantly checking the chart throughout the trading day – makes emotional management significantly more challenging.

Given that emotions can often derail even the most disciplined strategies, every Friday, I meticulously model support and resistance levels for indices, stocks, ETFs, crypto, and metals for the week ahead. This means these lines aren’t based on simple historical diagonals, but rather on high probabilities of future price action moves.

For instance, the SPX reached its bullish target of $5,925 on Monday, May 28th, subsequently retracing over the following days. Today, the price bounced precisely from $5,846, the central weekly level that, if breached, validates a bearish reversal. Similarly, the hit its weekly high in premarket hours on Thursday, finding exact rejection at $530 – a resistance level shared with premium subscribers a week in advance. Today, the price also bounced from $512, the central level for big tech.

The examples continue: encountered rejection at $208.3, its bullish target for the week, and today, price action successfully held above $204, the central level for this security. Tesla was rejected at the $365.5 zone, while Palantir convincingly broke above $127.9, settling precisely at the $132.4 zone, which was the next resistance anticipated last Friday.

For the week ahead, the following levels are essential to watch:

Setup:
Bullish continuation if this key level continues as support: $587.1
Immediate target for bullish continuation: $595.9
Potential bearish reversal target if the key level is breached: $581.1

QQQ

Bearish continuation if price continues below this key level: $519.2
The near-term bearish objective is: $511.9
Potential bullish reversal target if the key level is recovered: $526.4

Bullish continuation if this key level continues as support: $422
Immediate target for bullish continuation: $425.5
Potential bearish reversal target if the key level is breached: $419.2

Those levels apply for the next week, if you’re interested in a broader view of the levels and for more securities like SPX, , IWM, , , Palantir Technologies (NASDAQ:), NVIDIA (NASDAQ:), Tesla (NASDAQ:),

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(NASDAQ:), MicroStrategy (NASDAQ:), Eli Lilly (NYSE:), Unitedhealth Group (NYSE:),

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(NASDAQ:), Broadcom (NASDAQ:), SPDR Gold Shares (NYSE:), iShares Silver Trust (NYSE:), and a total of 40 securities, get access in my homepage.

For educational content about Stochastic, RSI, Candlesticks, Moving Averages, Support and Resistance levels, and others that I use frequently like Bollinger Bands, Volume Profile and McClellan Oscillator, visit my homepage and get access to the educational library,

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