The outlook for Thursday was for stocks to attempt a rebound rally and then move lower. The rebound rally failed to happen although the S&P did try 3 times in the morning to push back up. Each little rally failed and investors decided to sell positions, take profits and let stocks move lower. This is a shorter market direction outlook as I have moved more content to the USA members site. I believe Friday may be a pivotal day for stocks and as such members might want to consider some of the strategies I discussed in my market direction outlook and Investing Strategy Notes for July 24 article which they can review through this link. I recommend reading the information below first before reading the expanded members only content.
Market Direction Closings For July 23 2015
The S&P closed at 2,102.15 down 12 points and near the lows of the day. The Dow closed at 17,731.92 down 119.12 points. The NASDAQ closed at 5,146.41 down 25.36.
Market Direction Technical Indicators At The Close of July 23 2015
Let’s review the market direction technical indicators at the close of July 23 2015 on the S&P 500 and view the market direction outlook for July 24 2015.
Market Direction Technical Analysis for July 23 2015
Stock Chart Comments:
Today marked the third day of declines. The S&P closed down at the 50 day moving average. The 20 day simple moving average (SMA) continued to fall and is now ready to move below the 200 day which would signal more selling for stocks. In the selling on Thursday stocks managed to hang onto the 2100 level and close just above it. This is pivotal for stocks at this point in time.
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 still positive but pulled back slightly today. The most important thing to remember from momentum is that it remains positive.
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 a bit weaker than Wednesday but not by much which would indicate today’s selling was not strong enough to change the underlying market direction. The MACD histogram which is the gray bar chart behind the MACD signal lines, is starting to fall. This could signal a chance in market direction shortly.
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 took quite the downward turn today and closed negative and was falling sharply.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is now negative and is signaling lower for stocks.
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 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 down for stocks.
Market Direction Outlook for July 24 2015
Technical indicators are now predominantly pointing to more weakness for stocks and a move a bit lower than where it ended today. However there are also signs that stock may want to try a second rebound on Friday. For FullyInformed USA members, Friday is pivotal for the present market.
Members Only Market Direction Outlook and Investing Strategy Notes
I have expanded the Market Direction Outlook notes tonight as Friday is a pivotal day for stocks. FullyInformed USA Members can read the latest Market Direction Outlook and investing strategy notes directly through this link. Members can also sign in to the full USA site here. Non-members can join here or read about the benefits of a membership.
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