Must-See Charts: Wells Fargo, SPY

BALTIMORE (Stockpickr) -- It's Thursday -- and that means economic data will be at the forefront of today's market action. From this morning's jobless data to the Fed's leading indicators to a slew of companies' earnings data, expect today's market direction to be seriously impacted by the deluge of data hitting Wall Street.

With an uptick in volatility also taking place this week, traders are capitalizing on the increased moves that stocks sporting. To eke maximum gains out of the market, they're turning to the technicals.

>>Also: Technical Setups: Cigna, FirstEnergy, Boeing

Technical analysis uses a stock's price movements to determine where shares are headed in the future. Technical charts are used every day by proprietary trading floors, the Street's biggest financial firms and individual investors to get an edge on the market. And according to some sources, skilled technical traders can bank gains as much as 90% of the time.

Here's this week's look at how some of the biggest names on Wall Street are trading technically.

The SPDR S&P 500 ETF ( SPY) is one of the issues that constantly sees one of the highest trading volumes on the NYSE. That's in part because of the broad appeal of this $77 billion exchange-traded fund, which mirrors the performance of the broad-based S&P 500 index, a common proxy for the stock market. Because SPY provides exposure to the moves of the S&P, this fund has also become a haven for traders.

For the past few days, SPY has been consolidating in a relatively tight range, bleeding off momentum that was teetering on overbought territory. That consolidation is critical because it gives bulls a chance to regroup and gain conviction before attempting to storm their next resistance level. It also means that the market still holds a chance of seeing a continuation of the rally that started in late August.

>>Also: 5 Most-Undervalued Stocks in the S&P 500

For SPY to rally once again, we'll need to see shares of the ETF break above 119 and hold that level -- preferably by opening above it. A bullish moving average crossover could help spark that next upward move in the next few days.

U.S. bank stocks rallied hard yesterday, pushed by a combination of good earnings and a correction from the bearish action on Tuesday. One of the biggest gainers was Wells Fargo ( WFC), which reported its earnings numbers to Wall Street yesterday. In its call, Wells beat analysts' bottom-line expectations for the quarter and announced favorable trends in charge-offs and financial strength -- a welcome change for the firm.

Now, following Wednesday's buying frenzy, this stock is showing us an interesting technical outlook.

>>Who Owns Wells Fargo?: Warren Buffett

Shares of Wells Fargo closed above the 50-day moving average yesterday, a sign that buyers are willing to bid the company's shares past resistance levels right now. But the real challenge lies ahead at both trend line resistance (the blue line above) and the 200-day moving average (the red line above). If shares stall out at either level, a bounce back down to $23 seems likely.

That said, the bulls seem eager to continue Wells' push in this morning's premarket. I'd consider becoming a buyer above the blue trend line resistance level for a push to at least $28.

>>Who Owns Wells Fargo?: John Paulson

Aptly-named China Life Insurance ( LFC) is one of the largest life insurers in the People's Republic, with a $132 billion market cap and nearly 40% share of the market. Shares of the stock have been on a tear since September, rallying more than 22% during that time. Now, with a new breakout under LFC's belt, this stock could be headed even higher.

Shares of LFC broke above longstanding resistance yesterday, closing above the $70 level for the first time since the beginning half of the year. Now, with few overhead barriers for shares, a retest of the stock's 52-week high at $81 could be in the cards. Wait for today's mid-day market action before going long shares, though -- we'll want to see that support level confirmed.

>>Also: 10 Insurance Stocks That May Gain Up to 74%

To see this week's trades in action, check out the High Volume Technicals portfolio on Stockpickr.

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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.

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