The market direction outlook for Wednesday was for stocks to continue to rally higher. Wednesday was a much stronger day for stocks with all the indexes moving higher in a more stable environment. The VIX Index pulled back dramatically today as the “fear” factor left stocks. The VIX Index fell tp $14.18 down 9.16% on the day. More on the VIX Index is in the members section for this evening. Some of today’s move higher can be attributed to yesterday’s news on Coca Cola Stock and Johnson and Johnson stock. As well news that China’s economy grew 7.4%, while lower than the 7.7% in the previous quarter, still helped to boost investor confidence that the global economy is not going to fall apart.. Let’s take a look at the intraday chart
Market Direction S&P Intraday Chart April 16 2014
The one minute chart below for April 16 2014 shows one of the strongest days for stocks and uneventful. The early morning jump was revisited in the lunch hour and held through much of the afternoon. The closing last hour saw the S&P push still higher and close above 1860. Again, there is not much support above 1800 after the collapse last week. The 1840 level is sitting below today’s close and the 1870 level looms ahead and is within easy striking distance.
Advance Declines For April 16 2014
Stocks continued to advance on Wednesday and the advancing issues easily outweighed the decliners again with 77% of stocks advancing and just 20% declining. This marks the lowest percentage of declining stocks in several trading days. Meanwhile 118 stocks made new highs while 65 made new lows which again is favoring the bulls.
Market Direction Closings For April 16 2014
The S&P closed at 1862.31 up 19.33. The Dow closed at 16,424.85 up 162.99. The NASDAQ closed at 4086.23 up 52.06.
The Russell 2000 ETF IWM rose $1.21 on one of its better days today closing at $112.36
Market Direction Technical Indicators At The Close of April 16 2014
Let’s review the market direction technical indicators at the close of April 16 2014 on the S&P 500 and view the market direction outlook for April 17 2014.
The 1750 level has been holding the S&P up since the correction ended in early February. All the levels of any support above 1800 have been broken last week. This leaves the next area of any real support to be down around 1775. Yesterday the market direction fell all the way back to 1816.29 before rallying to close above 1840. Today the buying was more stable as investors pushed the S&P up to above 1860. This now pushes the S&P back above the 50 day simple moving average. The recovery has been uneven but the results are still surprisingly stronger than would be expected. If this marks the end of the recent correction than the move lower last week was actually a shallow dip when compared to the pullback in January. That is bullish for stocks. Despite the move higher though I remain cautious.
For Momentum I am using the 10 period. Momentum has been the best indicator over the past four months, replacing MACD as the most accurate indicator. Momentum continues to remain negative but moved higher 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 sell signal on Apr 7. The sell signal is still stronger but once again it turned higher.
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 negative but it too is rising.
Rate Of Change is set for a 21 period. The rate of change is turned neutral today which is somewhat a good sign for the rally to continue.
For the Slow Stochastic I use the K period of 14 and D period of 3. Today’s action was enough to move the Slow Stochastic into signaling that the market direction is now up. The Slow Stochastic is still oversold but continues to show an uptrend for Thursday..
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 continues to follow the Slow Stochastic. Indeed at the end of the day today, the Fast Stochastic issued a strong buy signal for Thursday.
Market Direction Outlook And Strategy for April 17 2014
For the final day of this shortened week, the technical indicators are mixed. The Fast and Slow Stochastic are both bullish for higher prices on Thursday. Momentum and MACD are still negative although they have turned up. The Rate of Change and the Ultimate Oscillator are more neutral on the market direction than they are positive or negative.
Outlook Is To The Bullish Side
The market direction outlook for Thursday then is for some weakness in the morning following the past 3 days of upward pressure, but I do think the afternoon could see the market direction close higher than today.
Gilead Sciences Stock (GILD)
Yesterday I mentioned Gilead Sciences Stock (GILD) and today I was unable to get the pricing and the volume I was look for. The stock has now moved higher and that has made the trade unavailable at present. I was asked by a couple of investors to mention that Gilead will announce its earnings on April 22 so that investors are aware that the trade for April 25 options expiry could turn out poorly if earnings miss. Analysts are looking for 84 cents and for the same quarter last year Gilead earned 48 cents so this would be quite a jump for the stock. I like selling options into and around earnings, but that method is certainly not for everyone. I find trading around earnings provides exceptional returns but again, some investors find the volatility can be unnerving.
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