The outlook for Wednesday June 17 2015 was for stocks to continue the bounce only less so which should be followed by a move lower. The big news today was the Federal Reserve’s comment that the economy appears to have survived a bit of “softness” in the past quarter and should continue to improve. There will however be no rate increase in June which means probably nothing until September at the earliest. The game of “wait-and-see” is continuing and the media immediately conjectured that two rate increases will be seen in the second half of 2015 but should still leave the year with a rate rise of less than 1%.
The market leading up to 2:00 PM was drifting lower with most of the volume to the downside but it was light. After the Fed minutes the S&P shot up to 2106.79 before closing back to 2100.44 which placed the S&P right on the important 2100 support level.
Advance Decline Numbers for June 17 2015
Volume was picked up slightly to 3.2 billion today with 58% of all volume to the upside and 40% to the downside. New highs came in at 88 which is up from yesterday’s 65 new highs and new lows were 71 which was almost the same as yesterday’s new lows.
Market Direction Closings For June 17 2015
The S&P closed at 2,100.44 up 4.15. The Dow closed at 17,935.74 up 31.26. The NASDAQ closed at 5,064.88 up 9.33.
Market Direction Technical Indicators At The Close of June 17 2015
Let’s review the market direction technical indicators at the close of June 17 2015 on the S&P 500 and view the market direction outlook for June 18 2015.
Stock Chart Comments:
The bounce continued for a second day and while it may have appeared not to be much of a bounce, it actually was a good bounce with the S&P up to 2106 in the mid-afternoon. The close for the day at 2100 set the S&P right at the important 2100 support level. The Middle Bollinger Band which is a 20 day simple moving average (SMA) is now down to the 50 day moving average but has not crossed down and below it to signal the market will fall lower. At one point in the afternoon the 50 day simple moving average (SMA) was reached but then the S&P closed just below it.
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 and almost unchanged from Tuesday..
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 and could turn positive shortly if there is another up day..
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 but is moving basically sideways.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change has signaled that a change in trend to down is probably underway. That signal is now changed to sideways for the market direction.
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 Thursday and has a buy signal in place.
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 as well and issued a buy signal today.
Market Direction Outlook for June 18 2015
There are a number of factors weighing on the market. Often there is a bounce after the Fed comments or minutes and then a pullback. This could be the case for Thursday. However the jump after the Fed minutes may have set the market up for a pullback in the morning on Thursday, it may also have enough momentum to recover from an early weak start on Thursday to push higher.
The 2100 level is important for this market. There are still a couple of weeks before Alcoa unofficially kicks off the next quarterly earnings. This could mean we still have a couple of weeks of higher volatility.
Technically the indicators are 3 positive, two negative and one sideways, but all the indicators are moving to the upside, even the negative ones. For Thursday stocks should start weak but end positive.
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