The Market Direction Outlook for Tuesday was for stocks to test 2100 for support. I explained in yesterday’s Market Direction Outlook that as long as the market closed around 2100 I had little concern. Today’s sell-off once 2100 broke around 1:20 has set the market up for another see-saw day on Wednesday. This is not yet the end of this rally but a test of 2100 to see how much support there is. Meanwhile the big fear of an early rise in interest rates returned today to haunt the markets just 3 days after the Fed Chair Yellen sparked a rally with her comments.
Advance Decline for Mar 24 2015
Volume on Tuesday was unchanged from Monday at 3.2 billion shares. Up volume was doing well in the morning but the collapsed in the afternoon with 63% of volume moving to the downside by the close. New highs plunged to 95 from above 200 but new lows were almost unchanged at 15.
Market Direction Closings For Mar 24 2015
The S&P closed at 2,091.50 down 12.92. The Dow closed at 18,011.14 down 104.90. The NASDAQ closed at 4994.73 down 16.23.
Market Direction Technical Indicators At The Close of Mar 24 2015
Let’s review the market direction technical indicators at the close of Mar 24 2015 on the S&P 500 and view the market direction outlook for Mar 25 2015.
Market Direction Technical Analysis for Mar 24 2015
Stock Chart Comments:
I explained on Friday and Monday that stocks would have a bit of trouble at the 2100 level. This has been resistance for some time and I had expected 2100 to be tested this week. The break of 2100 today does not end the rally just yet. On Tuesday the S&P closed below 2100 but still above all 3 major moving averages. Light support is at 2075 but it will take much heavier selling than was seen today to get the S&P there by tomorrow.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 was 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 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.
Momentum: For Momentum I am using the 10 period. Momentum is positive and moved higher today despite the afternoon drop.
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 on March 20. That buy signal pulled back today but is still in effect.
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 no longer overbought and is falling but still positive.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change has been pointing to a change in trend to up but refuses to confirm that trend change. As days have passed the rate of change has not altered its outlook and today’s little dip lower is setting up the first signal that a move up may be in jeopardy even before any kind of clear signal was given.
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 is overbought. The up signal after the close on Mar 24 is weak.
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 issued a sell signal today at the close. For tomorrow it is signaling a move lower for stocks.
Market Direction Outlook for Mar 25 2015
The technical indicators are mixed at the close on Mar 24. Four are still negative but of them only one is moving higher while the other three are moving lower. Of the remaining two indicators one, the Fast Stochastic is pointing down and the other, the rate of change is warning that the rally up may never actually get underway.
For Wednesday stocks look set to try to recover the 2100 period but the morning looks like it could be tough for stocks. I am expecting a bounce back attempt at the open and then more selling into the late morning. Then the market must try to recapture the 2100 period of risk falling lower to the 2075 level. For now Wednesday still looks like the S&P will attempt a positive close but the outlook is definitely changed to weakness with a sideways outlook and a possible bounce attempt to 2100.
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