The outlook for Monday was for the market to try to bounce. Stocks did have a good day, bouncing higher to reclaim much of what was lost. However breadth was poor and overall the jump was not strong enough to see investors apply new capital. Suspicions are running high that this was just a bounce. Tuesday’s trading will give us a better idea.
Advance Decline for Mar 9 2015
Volume on Monday pulled back a bit to 3.3 billion from Friday’s 3.86 billion. 54% of the volume was to the downside with 45% to the upside. This was better than the early afternoon when upside was less than 20%. New lows those rose dramatically to 84 while new highs fell to 48.
The new lows while concerning are not high enough to warrant a strong bearish outlook. They do however show that few investors were buying into the idea that the rally back on Monday was going to last.
Market Direction Closings For Mar 9 2015
The S&P closed at 2079.43 up 8.17. The Dow closed at 17,995.72 up 138.94. The NASDAQ closed at 4942.44 up 15.07.
Market Direction Technical Indicators At The Close of Mar 9 2015
Let’s review the market direction technical indicators at the close of Mar 9 2015 on the S&P 500 and view the market direction outlook for Mar 10 2015.
Market Direction Technical Analysis for March 9 2015
Stock Chart Comments:
The S&P pushed higher all day on Monday and managed to close just above the 2075 light support line. The rally though had poor volume and declining new highs. New capital was not seen entering stocks on Monday.
Meanwhile the S&P is still trading above all three major moving averages but it does look ready to fall to the Lower Bollinger Band which is the 50 day simple moving average (SMA). That could possibly get another bounce. For now though, the market looks ready to move lower to test the 2050 level.
Support and Resistance Levels:
These are the present support levels.
2100 is very light support and is now resistance. 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 recent pullback. Weak support is at 1970. Stronger support is then 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 at this point and it is not something I am anticipating at present.
Momentum: For Momentum I am using the 10 period. Momentum was negative on Friday and actually moved up slightly 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 weak sell signal on March 4 which was confirmed on Friday and continued to gain strength on Monday.
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. In one day the Ultimate Oscillator moved lower into negative readings.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is choppy and turned lower again today. The rate of change had been warning for a couple of days that the trend up was in jeopardy. On FFriday and again today it is signaling that the up trend is probably finished for now.
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 lower prices are ahead.
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 as well.
Market Direction Outlook for Mar 10 2015
Technical indicators are for the most part showing moderate downside action ahead for stocks. That means that unless stocks can rally harder and get the number of new highs growing again, the market will fall back and retest first 2050 and then 2000. For Tuesday we could see a continuation of the rally in the morning but overall I am expecting a down day on Tuesday.
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