After roller coaster days the SPX opened higher today and then spent the rest of the day watching the rally slip away. In the end the big rally that saw the SPX race to 2074.28 closed the day at 2051.31 but still, it held the 2050 level. So what should we expect for Friday?
Advance Decline Numbers for July 9 2015
Volume was again lower at 3.4 billion shares. 64% of all volume was to the upside but unfortunately trades were not enough to keep the SPX moving higher. There were though 102 new lows which was half of yesterday’s new lows and 22 new highs which was about 5 more than yesterday. Overall the day was actually fairly bearish.
Market Direction Closings For July 9 2015
The S&P closed at 2,051.31 up 4.63. The Dow closed at 17,548.62 up 33.20. The NASDAQ closed at 4,922.40 up 12.64.
Market Direction Technical Indicators At The Close of July 9 2015
Let’s review the market direction technical indicators at the close of July 9 2015 on the S&P 500 and view the market direction outlook for July 10 2015.
Market Direction Technical Analysis for July 9 2015
Stock Chart Comments:
The S&P gave back almost all the rally today although it did closed just above the 2050 support level. It is now inside the lower Bollinger Band and just below the 200 day moving average. The 20 day moving average is continuing to fall and should cross the 100 day moving average shortly. The 50 and 100 day moving average are turning down.
Support and Resistance Levels:
These are the present support and resistance levels. These levels have hardly changed in months as the market continues to move sideways.
2100 was light support and is now light resistance. Stocks will have to stay above it to change it back to solid support and convince investors that the market has staying power and will push well beyond 2100. That still does not appear to be the case.
2075 was light support. Below that is 2050 which is also light support. Stronger support is at 2000 which has repeatedly held the market up throughout each pullback in January and February.
Weak support is at 1970. Stronger support is 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 and bring to question whether the bull market is finished.
Momentum: For Momentum I am using the 10 period. Momentum is still negative although it rose a bit today.
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 June 29. The sell signal is active and gaining strength again.
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 turned sharply lower and is negative.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal turned back to sideways once again signaling not a lot of further downside lies ahead yet.
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 down for stocks and is deeply oversold..
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 deeply oversold.
Market Direction Outlook for July 10 2015
Technically the indicators are still all negative although now both stochastic indicators are oversold and could bounce at any time. Today’s give back of the rally was tough to see but clearly investors are worried about Greece and now Asian markets. Janet Yellen speaks on Friday and I would not expect much game changing news. I am doubting any interest rate rise will be on the table at the present time with stocks worldwide moving lower.
I think stocks will now try a stronger rally on Friday. At the time of my writing this article, Asian markets are higher once again and that should assist North American markets to push higher. While the bounce back on Friday may not be as strong as it was today to start off the day, I am expecting stocks will hold their gains better on Friday.
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