The rally today recovered all the drop from Monday and pushed the SPX index back above all major moving averages by the close.
Advance Decline Numbers
Volume on Tuesday was still low at 2.52 billion shares traded as the holiday period continued.
Whereas yesterday 74% of the volume was to the downside today 76% of volume was to the upside. New highs rose to 76 more than doubling Monday’s 30 new highs and new lows were almost unchanged at 27. Today marked one of the few days over the past month when new highs have outpaced new lows more than 3 to 1.
Market Indexes Closing Numbers
All indexes closed near their highs on Tuesday. The S&P closed at 2,078.36 up 21.86 and back above the 2075 support level. The Dow Jones closed at 17,720.98 up 192.71. The NASDAQ closed at 5,107.94 up 66.95 and enjoyed the largest gain of the three major indexes moving up 1.33%.
Market Direction Technical Indicators At The Close
SPX Market Direction Technical Analysis for Dec 29 2015
Stock Chart Comments:
Tuesday saw the SPX jump at the open which all three indexes did. Within the first 5 minutes the S&P had reached most of the high for the day. Only 6 more points were added by the close. The move today saw the index above all major moving averages. While the 50 day continues again to lead the market, the 100 day continues to trail below the 200 day which remains a solid sell signal despite the ongoing rally.
The 20 day simple moving average (SMA) is trending below the 50 day, a sell signal as well. The S&P today recovered the 2075 support level and closed just above the prior intraday high of 2076 from Dec 16.
Support and Resistance Levels:
These are the present support and resistance levels. Almost since the start of this year, these support levels have not changed. That is unusual for the stock market and is the first time since I started investing in the early 1970’s that the same support levels have been referred to for an entire year.
2100 was light support. Stocks have been unable to stay above this level and push higher on numerous occasions. It remains resistance.
2075 is light support. Below that is 2050 which was also light support. Stronger support is at 2000 which had repeatedly held the market up throughout each pullback in January and February but failed under the waves of selling in the last correction. Stocks continue to have trouble holding the 2000 level.
Weak support is at 1970 while stronger support is at 1956 and technically it is more important than 1970 for the market. 1940 is light support. 1920 is now light support. 1900 is more symbolic than anything else.
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. So far 1870 has held the market up better than any of the other support levels aside from 2000 which held the market up for months before the collapse in August.
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 of 384.72 points or 18% from the all-time high of 2134.72. 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: For momentum I use a 10 period when studying market direction. Momentum is positive 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 buy signal on Monday Dec 28. Today MACD confirmed that 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 and overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative but moving higher. It remains weak though and still refuses to turn positive during this rally.
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 is signaling up for stocks.
Market Direction Outlook for Dec 30 2015
For the second last day of the year, a jump in the price of oil assisted stocks in moving higher. The move above the 50 day moving average is a good sign for a probable continuation of the rally. However after hours this evening the price of oil pulled back, giving up much of today’s gains. That may impact stocks on Wednesday.
I am expecting weakness in the Santa Claus rally that is unfolding. The morning will probably see some selling near the open but I would expect a firming up of stocks as the morning progresses and a positive close. If oil should tumble further however, stocks will most likely give back some of the gains from today but not all.
The question now is with Santa finally in town, how long will he stay. We will know more on that on Wednesday by mid-afternoon.
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