The outlook for Tuesday June 16 2015 was for stocks to probably bounce but the longer term outlook for the week is for stocks to continue their decline. So does today’s rally change that outlook? Let’s take a look.
Advance Decline Numbers for June 16 2015
Volume was lower today by about 100 million shares with 2.9 billion shares traded. 64% of all volume was to the upside but new highs were still below new lows with 76 new lows and 65 new highs. In general Tuesday was neutral between the bulls and bears.
Market Direction Closings For June 16 2015
The S&P closed at 2,096.29 up 11.86. The Dow closed at 17,904.48 up 113.31. The NASDAQ closed at 5,055.55 up 25.58.
Market Direction Technical Indicators At The Close of June 16 2015
Let’s review the market direction technical indicators at the close of June 16 2015 on the S&P 500 and view the market direction outlook for June 17 2015.
Stock Chart Comments:
Yesterday I discussed the possibility of a change in trend based on the volume on Monday. Today’s move higher could possibly be the start of a change or simply a rebound rally. At present the indicators point to Tuesday’s action as being a rebound. The S&P closed above the 100 day moving average. The Middle Bollinger Band is falling rapidly and may cross down and over the 50 day simple moving average (SMA) which will signal a downturn, even a short-term one.
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 very 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 negative buy continues to rise and is nearing turning 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 sell signal on May 29. The sell signal is still active but it continues to weaken.
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 continued positive and rose again on Tuesday.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change is signaling that the market may be turning lower..
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.
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 as well but could be ready to issue a buy signal as early as Wednesday.
Market Direction Outlook for June 17 2015
Today’s bounce in stock prices looked technical as far as the indicators were concerned. There could though be more to the upside than just one day. However the indicators are dominated by negative numbers although many of those numbers are turning back up as sell signals continue to weaken.
On Wednesday I am not expecting naything new from the Fed’s comments. I am expecting interest rates will remain on hold over the summer months. This could spark an extension of today’s rally.
If that does not happen, I would expect stocks to move lower but in general the bias has shifted back to up for Wednesday. Whether there is more upside than just Wednesday is tough to call just yet. I should have a clearer picture by the end of trading on Wednesday.
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