There is not a lot to say about Market Direction for today. My outlook yesterday was for market direction today to be soft with a shallow dip and then by the week’s end for the market direction to be bouncing back and moving higher.
Market Direction Was All About Fiscal Cliff Yet Again
Market Direction today was all about the fiscal cliff. First President Obama spoke at length on the recent tragedy in Connecticut and then rambled on about the fiscal cliff in what had to be a somewhat unusual performance on his part. He indicated that he was puzzled by the Republican failure to pass his budget deal to date. This rattled the markets and they moved lower. Shortly after at 2:30, Boehner spoke in a very terse statement lasting barely minutes and announced congress would be passing the B plan and everything was back to the President’s court.
I am quite a bit older than a lot of investors today but I remember a time when politicians were Americans first and Democrats and Republicans second. It really is time for the nation’s politicians to set aside party differences and work together to resolve major issues. Far too many seem to have forgotten the ordinary citizen. At times it seems like politicians are in their own little country and the rest of the population is still in America.
Market Direction Technical Analysis Of Dec 19 2012
At the close of today most of the market direction technical indicators had pulled back. But overall today’s action did no damage to market direction moving higher and there are a couple of interesting technical readings.
For Momentum I am using the 10 period. Momentum is still positive but pulled back slightly with today’s afternoon sell-off.
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) is still positive and it too pulled back a bit due to the afternoon sell-off.
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 it too is lower.
Rate Of Change is set for a 21 period. Rate Of Change turned lower but is still positive.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is is signaling that this is just a buying opportunity. The readings from the Slow Stochastic is for the stock market to be higher shortly, perhaps by Friday but certainly by next 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 still overbought and it is signaling there is more selling pressure for tomorrow, or certainly to start the day.
Market Direction Chart Of S&P 500 For Dec 19 2012
Below if the market direction chart of the S&P 500 for today. I thought I would include it to show how easy it is for political infighting to cause a sell-off and how nervous investors remain regarding the fiscal cliff issue.
As soon as Obama started speaking the market direction began to fall. When Boehner spoke the market direction fell further, tried to rally, failed and sold-off into the close. Normally this kind of selling into the close warns that more selling will commence the opening on the following day.
Market Direction Outlook And Strategy
The market direction breakout from last week is a clear signal. Yesterday’s break from the 50 period moving average is another such signal. The fiscal cliff issue is temporarily holding the market back but overall the market direction is clearly higher. The slow stochastic shows how much support there is in the market direction and the readings from the Slow Stochastic stochastic is indicating that the market direction will be higher shortly.
This is a buying opportunity or in my case a Put Selling opportunity.
There may be more selling into tomorrow but it will be an opportunity to get into positions for the next push back as the Santa Claus Rally should be getting underway. I am not sure even the political wrangling can stop it. It can delay it, but I doubt it will stop it.
Market Direction for tomorrow is for some selling in the morning and a possible bounce back later in the day. If there is no bounce back I believe there will be on Friday or Monday.
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