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Market Direction today continued the sideways action. Intraday another new 5 year high was made on the S&P 500 before the index closed down slightly. While there was not a lot of economic news, there were some interesting technical aspects to today’s market action that are worth looking at. Meanwhile let’s check the markets closing numbers first.

Market Direction Closings

The S&P 500 closed at 1510.01, down just 0.92 points and the Dow closed at 13,971.23, down 21.73 points. The NASDAQ closed at 3192.00 down 1.87.

Market Direction Chart for Feb 11 2013

The 5 minute chart for today’s action is below. There are two significant technical patterns to review. The first is the opening of the market today which was followed by a decline from the outset and then the markets tried to rally but closed lower than today’s open. Meanwhile as before, the market set up higher lows throughout the day as each dip was bought by investors. However the pattern below is not as bullish as some may think. Indeed it is more bearish than bullish, indicating again concern among investors in the direction of stocks. Basically investors are worried that they may end up owning stocks at higher valuations should stocks pull back. They are therefore cautious.

Market Direction Feb 11 2013

Market Direction Feb 11 2013 5 minute chart S&P 500

Market Direction Technical Indicators At The Close of Feb 12 2013

Let’s take a moment now and review the market direction technical indicators at today’s close on the S&P 500 and view the next trading day’s outlook.

Market Direction Technical Indicators for Feb 11 2013

Market Direction Technical Indicators for Feb 11 2013

For Momentum I am using the 10 period. Momentum is still positive but is staying sideways and reflect the lack of conviction among investors.

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 signaling that the market direction is lower. This starts the second week with the same signal.

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 positive and has moved back to being overbought.

Rate Of Change is set for a 21 period. Rate Of Change is still positive but is falling slightly from Friday.

For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is overbought to the extreme but it is still signaling that the market direction remains bullish.

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 also extremely overbought and it too is signaling market direction is higher..

Market Direction Outlook And Strategy for Feb 12 2013

The market direction outlook for Tuesday then is much of the same although there is now enough indicators that the market direction may begin to fall tomorrow, that investors should keep a watchful eye out. I have no plans for more Put Selling tomorrow unless one of my favorite stocks pulls back dramatically.

Caution remains warranted while the market direction continues to try to sort itself out. The bias I believe is for the market direction to turn lower.

Internal Market Direction Links

Profiting From Understanding Market Direction (Articles Index)

Market Timing Articles Index

How I Use Market Timing

Understanding Short-Term Signals

Various Market Timing Systems

Market Direction Candlestick Daily View (Members only)

Market Direction Portfolio Ongoing Trades (Members only)

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