The outlook for today is for stocks to keep grinding higher but there will be pockets of weakness. This is a pivotal week for stocks as some big names reports this week. YUM Stock is tomorrow, Microsoft Stock is on the 24th. Amazon Stock reports on the same day and Netflix reports today. Apple stock is on the 23rd and Facebook Stock is on the 23rd as well. Caterpillar reports on the 24th. This should give investors a lot of insight into how good or poorly corporate earnings are going to be coming in at.
Market Direction Intraday April 21 2014
Today has been choppy which is what I wrote about in last night’s market direction outlook for today. Investors remain nervous and this is a big week for earnings. The morning saw a choppy rise as investors jumped in and within half an hour had pushed the S&P to above 1870. From there the market sold off and I did one Trading For Pennies Strategy trade until the market seemed to find a bottom at 1865. The 1865 level broke briefly in the mid-morning but then recovered and pushed back to the 1865 level. Very choppy action ensued but with that level holding intraday, investors have pushed the market higher and are trying to get a close back above 1870. That could be tough until we see more earnings but never count out investor enthusiasm.
Market Direction Outlook Into The Close For April 21 2014
Into the close I think investors will not be able to hold the 1870 level. It would be nice to see a close above it but I think most investors will want to see some earnings first and then make a decision on buying stocks at higher valuations. Earnings in general have to be solid and strong to support these higher valuations. I have a lot of doubt that is possible.
NASDAQ Intraday Market Direction April 21 2014
The NASDAQ is the index to watch now although even the small caps (Russell 2000) is also imp0rtant. The NASDAQ today sees investors trying to break the 100 day exponential moving average (EMA)and signal a move still higher. The problem right now is that the NASDAQ has not come up against any resistance yet. All the past areas of support that are not resistance must be overcome. This is not going to be easy. The NASDAQ is comprised of more than just a handful of big cap stocks. Apple Stock makes up a considerable portion of the index. If earnings disappoint with Apple Stock, this will push the NASDAQ Index lower. That could spell serious problems for the market direction recovery in general. You can see in the chart below just how far the NASDAQ index has fallen and the work that lies ahead for a recovery.
Other intraday technical indicators show that Momentum while negative is rising.
MACD had a very strong sell signal and while it is still in p0lace it is weakening.
The Ultimate Oscillator though is showing that the NASDAQ is already overbought and yet the index is not even over the 100 day exponential moving average (EMA) yet. The overbought signal is being generated by the amount of daily trading now going on as investors are simply buying and selling stocks like Facebook and Twitter and hundreds more on a daily basis.
The Rate of Change had signaled last week that a change was coming and the market has seen the selling end. But the Rate Of Change is still negative and while it is climbing, the recovery in the Rate Of Change is painfully slow and show a continuing lack of conviction from investors.
Both the Slow Stochastic and Fast Stochastic indicators signaled a buy sign last week and so far they have been correct. Both signals remain open to more upside action but the strength of the signals is fading.
Summary For April 21 2014
Overall the market direction up is still somewhat impressive in the S&P and the Dow but the divergence between those two indexes and the NASDAQ and Russell 2000 is telling. No market has sustained an upward move without the majority of stocks following that trend higher. At present this is not the case and until the NASDAQ tackles the resistance levels that lie ahead and gets back above the 50 day simple moving average (SMA), most investors will be nervous and continue to enter into short-term day or swing trades until the market makes a decision one way or the other.
With April winding down, I won’t be surprised to see more movement to the upside but then more selling as we enter into May. Staying cautious and keeping some capital back while still trading in smaller positions is definitely warranted at this time.
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