Friday’s rally was really more a see-saw day until mid-afternoon when it became apparent that most of the market would rise. But the day closed on light volume and with new lows still way above new highs.
Advance Decline Numbers for Aug 14 2015
Volume was below 3 billion shares at just 2.8 billion for the day. While 64% of all volume was to the upside, only 49 new highs were made while 105 new lows were recorded. Much of Friday’s up action was more technical than fundamental.
Market Direction Technical Indicators At The Close of Aug 14 2015
Let’s review the market direction technical indicators at the close of Aug 14 2015 on the S&P 500 and view the market direction outlook for Aug 17 2015.
Stock Chart Comments:
Friday’s close saw the S&P back to the 100 day moving average. The 20 day simple moving average (SMA) has continued to fall but is not yet falling below the 50 day.
Support and Resistance Levels:
These are the present support and resistance levels and there are still no changes.
2100 is light support. Stocks will have to stay above it to change it back to solid support and convince investors that the market has staying power and will push well beyond 2100. That still does not appear to be the case.
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 pullback in January and February.
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 and bring to question whether the bull market is finished.
Momentum: Momentum is negative and rising.
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 August 4 that was still active on Friday.
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 rising and nearing overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal remains negative and is pointing lower for stocks.
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 signaling 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 has a weak buy signal in place and still points to up.
Market Direction Outlook for August 17 2015
Technically the indicators are split with 3 pointing lower and 3 pointing higher for Monday. The technical indicators then are basically pointing to a neutral day. Overall I think stocks have a better chance of moving up than they do down. I will be staying cautious on Monday and let the first hour of trading be the guide I will follow before committing any capital. Overall my outlook is stocks will be virtually unchanged by the close on Monday.
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