Market direction certainly didn’t follow the market timing technical indicators which I discussed in yesterday’s market timing column. In the morning the market direction did rise, but once the market began to digest the extent of the Spanish banks bailout investors became nervous again and sold the S&P down by 1.2%.
The S&P 500 is now back below the 200 day moving average. The stock market continually retesting of the 200 day moving average is not a good sign. The chance that the 200 day moving average can hold is probably less than 50%. For those readers who are following candlestick market timing, yesterday the candlestick timing had advised that investors should watch for the market to possibly sell lower. Today at the close the candlestick timing gave a market sell signal.
Market Direction Still Mixed As S&P 500 Holds Above 1300
The market direction signal is still mixed with the S&P 500 falling below the all important 200 day moving average but still managing to hold just above the all important 1300 level. If 1300 breaks, the S&P 500 will probably want to retest 1275. A break below 1290 would definitely be bearish short-term for the market. A hold at or above today’s close would be a good sign that there is still some type of rally left in the market at this point.
Market Timing Technical Indicators
My market timing technical indicators are also mixed which reflects the attitude of investors at the moment.
Momentum has turned negative again but barely. MACD however continues to show a positive divergence which could signal there is still life in the rally yet. The Ultimate oscillator is turning back down and Rate Of Change is negative. Slow stochastic is at the point of change and slow stochastic is still positive but only barely and should the market sell further tomorrow it will signal market direction down.
Market Direction Outlook For Tuesday
Market direction outlook for Tuesday is mixed. The bias remains to the downside with 3 indicators definitely negative, 1 indicator showing trend change and just 1 indicator pushing higher. The final indicator, slow stochastic is warning that a change in market direction could be in the cards.