The Market Direction Outlook for Wed Apr 8 was for stocks to move more sideways than up or down but with a slight bias lower. By the end of the day both had occurred but the indexes still managed to squeak out a gain. Fed minutes released at 2:00 PM caused the markets to see-saw, then plunge and then rally but then drift lower into the close. The problem for stocks, according to many analysts who responded to the Fed minutes, is that if interest rates rise in June, it will stun investors and definitely cause a pullback in stocks if not a strong correction. Until then most analysts speaking after the Fed minutes, felt that stocks are probably fully valued and many overvalued. They believe any upside action from the present valuations, will be short-lived.
Meanwhile Alcoa reported revenue that was lower than anticipated but beat estimates for quarterly earnings. The stock initially moved higher but then pulled back after the close. Bed Bath and Beyond reported their quarterly results which disappointed and that stock fell after hours as well. Add in the huge buildup of oil inventory and stocks may have a tough time on Thursday. Let’s take a look at today’s action.
Advance Decline for Apr 8 2015
Volume on Wednesday rose to 3.2 billion, a rise of 200 million shares over Tuesday’s numbers. 57% of all volume was to the upside and 41% was to the downside. On the surface this looks like a win for the bulls but new highs were just 105 while new lows was only 9. The advance decline numbers continue to favor the bulls but the overall strength is poor.
Market Direction Closings For Apr 8 2015
The S&P closed at 2,081.90 up 5.57. The Dow closed at 17,902.51 up 27.09. The NASDAQ closed at 4,950.82 up 40.59 for the best showing of all the indexes.
Market Direction Technical Indicators At The Close of Apr 8 2015
Let’s review the market direction technical indicators at the close of Apr 8 2015 on the S&P 500 and view the market direction outlook for Apr 9 2015.
Market Direction Technical Analysis for Apr 8 2015
Stock Chart Comments:
Stocks had quite the day again on Wednesday but still managed a positive close. The S&P 500 closed just above the 50 day simple moving average (SMA), keeping the index above the three main moving averages. Meanwhile the 20 day SMA or Middle Bollinger Band which fell to the 50 day simple moving average (SMA) is still trend on top of the 50 day moving average for the third trading day. If the 20 day falls lower it will issue a sell signal. At present it is sitting cautiously but giving no indication which way it will turn, up or down.
The market today fell to the 2075 level twice but each time closed above it. This is building strength at the 2075 support level but the strength is not overly strong just yet. Meanwhile you can see in the stock chart that stocks are trending more sideways than up or down and they have yet to recover the highs from even March 30, let alone the highs from March 25 and late February. Two things need to be watched – the 20 day which if it falls below the 50 day will signal market direction is down and the index itself as it must now recapture the highs of March 30 with good volume to confirm the next move is still up for stocks.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 was very light support and is now resistance. 2075 is light support. Below that is 2050 which is also light support. Stronger support is at 2000 which has repeatedly held the market up throughout each recent pullback.
Weak support is at 1970. Stronger support is at 1956.
1870 and 1840 are both levels with strong enough support to delay the market falling and should see a sideways action attempt while investors decide whether to sell or buy.
The other two support levels are 1775 and 1750. I have explained that these two are critical support for the present bull market. While 1775 is important it is 1750 that is the bottom line.
A break of 1750 would mark a severe correction from the most recent high. This would be the biggest correction since April 2012. A pull-back of that size would definitely stun investors.
Momentum: For Momentum I am using the 10 period. Momentum is negative but it is back rising and could easily turn positive if Thursday is an up day for stocks.
MACD Histogram: 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 March 25. The sell signal is now just negative 0.20 which is on the verge of issuing a possible buy signal.
Ultimate Oscillator: 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 again and rising
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change turned higher and is signaling a change in trend to up is underway.
Slow Stochastic: For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic tries to predict the market direction further out than just one day. The slow stochastic is still pointing up for stocks.
Fast Stochastic: 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 issued yet another up signal today.
Market Direction Outlook for Apr 9 2015
The technical indicators are gradually becoming more bullish. Only momentum is still negative and MACD but both are very close to turning positive. The problem now for stocks is that technically they are due to move higher, but fundamentally the revenue from Alcoa and Bed Bath and Beyond are poor and both stocks moved lower after hours. This could be setting the market up for a pullback. So for Thursday, technically the market looks set to rise but fundamentally stocks look set to decline. Another mixed day then is expected.
Stay FullyInformed With Email Updates
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)