The market rallied higher on Monday on the back of rising oil prices but also on the outlook for the US Presidential Elections. Investors hate uncertainty and this election has been filled with uncertainty. The weekend though answered a lot of questions as far as investors were concerned about who is running from both parties and with Super Tuesday on March 1 just a week away, there will be an even clearer picture of Presidential Candidates. Once that uncertainty is gone investors will begin to focus on the possibility of a rate increase for March.
Index Closing Prices
The indexes closed just of their highs for the day. The S&P closed at 1,945.50 up 27.72. The Dow Jones closed at 16,620.66 up 228.67. The NASDAQ closed at 4,570.61 up 66.18.
Advance Decline Numbers
Volume on fell back to 4 billion shares, the lowest volume in weeks. By the close, 88% of all volume was moving to the upside. 75% of all stocks on New York were rising. New lows fell back to 14. New highs outpaced new lows for only the fourth time this year at 55.
Market Direction Technical Indicators At The Close
Market Direction Technical Analysis for Feb 22 2016
Stock Chart Comments:
The S&P closed above at 1945 today pushing above the 1940 level TheS&P is now trading well above the 20 day simple moving average (SMA) and just below the 50 day moving average. The 200 and 100 day moving averages are continuing to lead the market and are showing no signs of changing direction. They continue to point dow.
Support and Resistance Levels:
These are the present support and resistance levels. These levels have not changed since January 2015. 2100 is resistance.
2075 was light support and is also resistance. Below that is 2050 which is also resistance.
Stronger support was at 2000 which is now resistance.
Weak resistance is at 1970 while stronger resistance is at 1956 and technically it is more important than 1970 for the market. 1940 is light resistance as was 1920. 1900 is more symbolic than anything else.
1870 is support. 1840 continues to be support. The 1820 level is light support. The strongest support level is at 1800.
1775 and 1750 are both 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 all-time high of 2134.72. This would be the biggest correction since the plunge in 2011 of a 20% pullback. A pullback to 1750 from the all-time high would be a drop of 384 points for a decline of 18%. A pull-back of that size would definitely stun investors and bring to question whether the bull market which started in 2009 is finished. From 1750 it is an easy slide to 1600 which was near the market top in 2007.
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 Feb 16 which is strengthening.
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 rising. It is signaling oversold.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and rising indicating there is more upside to the rally, yet. The reading though is at 4.09 which, while not high, is quite the jump from just two trading days ago when it was 1.94. This indicates the market is moving into an overbought position.
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 pointing up for stocks. It is 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 pointing up for stocks. It is overbought.
Market Direction Outlook for Feb 23 2016
The technical indicators are all positive and three are overbought or if we take the Rate Of Change reading into account, possibly 4.
The market may stall here and either push to 1950 and then drop back or it may open weak, fall to just below or at 1940 and then try to rally back up toward 1950.
If on the other hand, the market rallies hard on Tuesday and breaks 1950, we should see some weakness on Wednesday.
Whatever does happen on Tuesday the S&P should break 1950 either Tuesday or Wednesday. Resistance is at 1956 which will slow the advance.
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