The Market Direction outlook for Tuesday was for the market direction to be weak in the morning and then push higher later in the day. I did not anticipate the market direction dropping back so heavily in the morning but once again the dip was bought, or in my case puts were sold, and the market direction pushed higher in the afternoon. By the close we were sitting at all time new highs in the S&P 500. Now on the verge of breaking 1600 for the first time in history, the S&P 500 continues to defy analysts and investors alike as it pushes higher. But while many investors wonder about the market direction being able to continue in this way much longer, a lot of institutional investors are in the markets and continue to believe that stocks is now the place to be instead of bonds.
Market Direction Closing For Apr 30 2013
The S&P 500 closed at 1,597.57 up 3.96 points. The Dow closed at 14,839.80 up 21.05 points. The NASDAQ closed at 3328.79 up 21.77 points.
Market Direction Technical Indicators At The Close of Apr 30 2013
Let’s take a moment now and review the market direction technical indicators at the close of Apr 30 2013 on the S&P 500 and view the market direction outlook for May 1 2013.
For Momentum I am using the 10 period. Momentum is continuing positive although it pulled back a little today.
For MACD Histogram I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9. MACD (Moving Averages Convergence / Divergence) issued a buy signal on Friday and is continuing to climb.
The Ultimate Oscillator settings are Period 1 is 5, Period 2 is 10, Period 3 is 15, Factor 1 is 4, Factor 2 is 2 and Factor 3 is 1. These are not the default settings but are the settings I use with the S&P 500 chart set for 1 to 3 months.
The Ultimate Oscillator is still positive and reaching toward overbought.
Rate Of Change is set for a 21 period. Rate Of Change is positive and climbing indicating that more buying was occurring today.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is overbought and is still indicating that the market direction is higher. As it looks out more than a day or two this could be a good sign for the market direction to be higher by mid-week.
For the Fast Stochastic I use the K period of 20 and D period of 5. These are not default settings but settings I set for the 1 to 3 month S&P 500 chart when it is set for daily. The Fast Stochastic is extremely overbought with a K period reading of 100 and it is still indicating that the market direction will be up on Wednesday.
Market Direction Outlook And Strategy for May 1 2013
Yesterday I explained I thought the S&P 500 would make a new high during either Tuesday or Wednesday. The market direction continues to show resilience and strength despite the early morning plunge. I took advantage of the plunge to sell some puts on a few stocks, but tomorrow may brings additional opportunities. A reading of 100 % on the Fast Stochastic K period is extremely overbought and very often that signal is followed by a weak day. While the indicators are continuing to show strength don’t be surprised if the market shows weakness on Wednesday.
Weakness though is only natural as investors remain nervous with each push higher in the S&P 500. By the close tomorrow I am expecting the market direction to still hang tough here and push higher still. As the market pushes higher, more and more investors doubt and that doubt is often what keeps the market direction still up. I am continuing Put Selling and I have moved additional capital into my trades and increased the number of put contracts being sold. That said I still have a lot of cash sitting looking for more Put Selling opportunities. This week should continue to perform well, but this is just the start of the worst 6 months for stocks. A lot of analysts talking today commented that this year it looked like “Sell in May” would not be the right strategy. I think it is far too early to judge that.
This week continues to look decent for stocks, but the unemployment numbers on Friday could change next week’s outlook. It should be interesting to see how May turns out. Tomorrow then I am expecting weakness with the market so heavily overbought, but I do believe it will still end up trying to push higher.
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