The outlook for Friday was for stocks to basically inch their way forward but the overbought condition would become a lot more pronounced. A positive close was still expected and in the end the S&P and NASDAQ closed higher with the NASDAQ at a new all-time high while the DOW closed lower.
Advance Decline Numbers for July 17 2015
Volume was steady for a second day on Friday at 3.3 billion shares traded. Up volume slipped to only 28% of all trades and new highs fell to less than half of Thursday’s with just 71 new highs. New lows came in at 189 which is a dramatic rise from Thursday’s 143.
Market Direction Closings For July 17 2015
The S&P closed at 2,126.64 up 2.35. The Dow closed at 18,086.45 down 33.80. The NASDAQ closed at 5210.14 up 46.96.
Market Direction Technical Indicators At The Close of July 17 2015
Let’s review the market direction technical indicators at the close of July 17 2015 on the S&P 500 and view the market direction outlook for July 20 2015.
SPX Market Direction Technical Analysis for July 20 2015
Stock Chart Comments:
The S&P on Friday managed a small close higher but the closing candlestick was what is referred to as a hanging man or hangman which often indicates a reverse in direction. What we want to watch for is the opening on Monday and whether it is lower than Friday’s close. If it is, then usually stocks will move lower.
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 is light support. 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 is 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 positive but turned sideways.
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 July 14. The up signal is gaining strength.
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 overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal has changed to up but it remains with a weak up signal.
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 up for stocks and 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 signaling up for stocks and is also overbought.
Market Direction Outlook for July 20 2015
The market is till overbought and there are strong indications stocks could slip back on Monday. The open may hold the key to Monday. If stocks open lower than Friday’s close, watch for stocks to end the day lower. If the open is higher than Friday’s close then look for the S&P to move higher.
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