The outlook for Monday was for stocks to stay weak and move lower. The Greek situation combined with data from China showing a sluggish economy kept investors on edge and out of the market for much of Monday.
Advance Decline for Feb 9 2015
Volume was lower on Monday with 3.5 billion shares traded. 56% of all issues were lower while 43% were higher. There were only 50 new highs and 22 new lows. With numbers like these the bulls have to do more work to get the new highs moving again.
Market Direction Closings For Feb 9 2015
The S&P closed at 2,046.74 down 8.73. The Dow closed at 17,729.21 down 95.08. The NASDAQ closed at 4,726.01 down 18.39.
Market Direction Technical Indicators At The Close of Feb 9 2015
Let’s review the market direction technical indicators at the close of Feb 9 2015 on the S&P 500 and view the market direction outlook for Feb 10 2015.
Market Direction Technical Analysis for Feb 9 2015
Stock Chart Comments:
The S&P losses today were slight and the index managed to close just above the 50 day simple moving average (SMA). However for much of the day the index traded back and forth over the 2050 support level and then closed beneath it. Tomorrow it must recover that level or risk falling further.
Support and Resistance Levels:
These are the present support levels.
2075 was light support and is now resistance. Below that is 2050 which is 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 then 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 at this point and it is not something I am anticipating at present.
Momentum: For Momentum I am using the 10 period. Momentum is slightly negative at the close..
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 weak buy signal Feb 4 and is now sideways but still positive.
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 but falling.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is back up and sitting neutral signaling the indecision among investors.
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 neutral and overbought.
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 down for stocks and is overbought.
Market Direction Outlook and Strategy for Feb 10 2015
Technically the indicators are still split but 5 are weaker and one is back neutral after being negative on Friday at the close. Again we have a mixed outlook for Tuesday but with only 50 new highs today, the market looks weak again. This has been the ongoing story with stocks since the start of the year. Investors remain cautious and yet the losses today were again minor as investors are looking for stocks to move higher and are reluctant to sell positions afraid that higher prices lie ahead.
For Tuesday the bias remains to the downside but for the S&P the 2050 level is important. It is light support but the market needs to hold this support line, nonetheless. Otherwise it risks falling lower.
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