The jobs numbers on Friday at first buoyed the market but then by 12:30, the market began to decline. While losses were small, it did seem to indicate that a lot of traders did not want to hold positions over the weekend.
Advance Decline for Feb 6 2015
Volume was back up on Friday with 4.3 billion shares traded. A lot of investors looked upon Friday as a possible top to the present rally and wanted out. Volume picked up quickly in the afternoon and heavier still into the final hour of trading which saw the S&P fall the most for the day.
New highs came in at just 132 while new lows were only 16. The market though needs new highs to be above 200 and this rally is not producing these types of numbers. On Friday down volume came in at 54% and up volume at 45%.
Market Direction Closings For Feb 6 2015
The S&P closed at 2,055.47 down 7.05. The Dow closed at 17,824..29 down 60.59. The NASDAQ closed at 4744.40 down 20.70.
Market Direction Technical Indicators At The Close of Feb 6 2015
Let’s review the market direction technical indicators at the close of Feb 6 2015 on the S&P 500 and view the market direction outlook for Feb 9 2015.
Stock Chart Comments:
The S&P turned down by lunch hour and sold off into the close. Volume was heavy. The close on Friday places the S&P just above the prior two rallied from early January and mid-January. It closed above the 50 day moving average on Friday but set up a weak opening for Monday by closing just off the lows for the day. The S&P closed above the important 2050 level but looks set to give that level another test on Monday at the start.
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 positive at the close 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 weak buy signal Feb 4 and continued to climb on Friday despite the selling.
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 is negative and continues to fall. It may be signaling a change in trend back to down.
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 higher for stocks on Monday but the signal is weak and the signals lines look set to turn down.
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 up for stocks and it too is overbought but its signal up is even weaker than the Slow Stochastic and it too looks ready to signal down for stocks.
Market Direction Outlook and Strategy for Feb 9 2015
Technically the indicators still split with two that have moved up slightly, one that is very overbought and three that may be signaling lower for stocks for Monday.
Technically then it comes down to momentum and who has the most strength, bulls or bears. The morning looks set to be weak. The overall day itself also looks weak although momentum turned slightly up on Friday despite the selling in the afternoon. However the stochastic indicators are both weak and look ready to issue sell signals on Monday. With the rate of change turning negative, the outlook is mixed but there is a bias lower.
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