The outlook for the first day of February was for a quick jump higher at the open, then selling in the morning, then a rally attempt in the afternoon and then a lower close. Everything worked out except the lower close. Instead the market ran higher and the S&P closed back up at the 2020 level.
Advance Decline for Feb 2 2015
Volume for much of Tuesday was slow but the last hour and half with the market suddenly running higher brought in investors. Volume picked up dramatically and reach 4 billion shares. 80% of all volume was to the upside and just 18% to the downside by the close. This was far different from the intraday chart which I posted in the mid-afternoon and shows the leap higher and the number of investors it dragged in. New highs though came in at just 138 and new lows at 74.
Market Direction Closings For Feb 2 2015
The S&P closed at 2020.85 up 25.86. The Dow closed at 17,361.04 up 196.09. The NASDAQ closed at 4676.69 up 41.45
Market Direction Technical Indicators At The Close of Feb 2 2015
Let’s review the market direction technical indicators at the close of Feb 2 2015 on the S&P 500 and view the market direction outlook for Feb 3 2015.
SPX Market Direction Technical Analysis for Feb 2 2015
Stock Chart Comments:
The S&P bounce once more after falling below the 2000 level during the morning and commenced a climb higher which ended with the S&P back to the 2020 level and above the 100 day exponential moving average (EMA). The other chart indicators did not change. The Upper Bollinger Band continues to fall and the 20 day SMA is continuing to fall to the 100 day moving average.
Support and Resistance Levels:
These are the present support levels.
2075 was light support and is now resistance. Below that was 2050 which was light support and is now resistance. Stronger support is at 2000 which once again held the market up on Monday. I was surprised by the ability of the 2000 level to hold.
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 positive but more neutral than anything else.
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 Jan 28 and continues to stay negative.
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.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is trending negative and still points to a lower move ahead.
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 issued a weak up signal 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 also signaling for for stocks and has a fairly strong buy signal in place at the close.
Market Direction Outlook and Strategy for Feb 3 2015
Historically the first trading day of February has been up in 10 of the last 12 years. February though is the weakest month of the best 6 months of the year. It was nice to see the solid rally higher in the last hour of trading, but we need several days of follow through and not whipsaws to prove that this latest pullback was just another buying dip.
Technically the market was oversold on Friday as well so Tuesday is now a pivotal day. The technical indicators are 3 pointing up, two pointing down and 1 neutral. Both down indicators have weak down readings. The bias would seem to be back to up for stocks. I am not convinced myself so we will have to see what Tuesday brings. Technically though Tuesday looks set for a move up.
Investing Strategy Notes For Monday
I will have in the members forum investing strategy notes to prepare for Monday and the week ahead.
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