The outlook for Wednesday was for some weakness in the morning and then an attempt to move higher in the afternoon. A weak day was expected which is what we saw. Oil though rose once again after a pullback on Tuesday. Oil closed up $1.79 to $38.29 and Brent crude closed at $41.07. Many analysts are now indicating that oil’s rally is real and a drop back to $30 or lower is “off the table”.
Today marked the beginning of the 8th year of this present bull market and many analysts expect the European Central Bank to provide further stimulus for the Euro-Zone on Thursday, which should keep this long bull market alive.
The S&P closed up half a percent at 1989.26, up 10 points on what was a choppy morning and then a sideways afternoon into the close. This places the S&P below the 1990 level but well within striking distance of reaching the 2000 level.
The Dow Jones closed back above 17,000 at 17,000.36 as it rose to 36.26 although it was higher during the morning and lunch hour.
The NASDAQ rose by 0.55%, up 25.55 on the day to close at 4,674.38. The morning saw the low for the day at 4,642.42. The afternoon saw the market push higher and the close saw an attempt in the last few minutes to move higher.
Advance Decline Numbers
Volume drop again on Wednesday, to 4.05 billion shares. 65% of all trades were to the upside and 68% of all volume was rising.
There were 86 new highs and 9 new lows which continues to suggest the next move the market will be above 2000.
The NASDAQ on the other hand has 1.79 billion shares traded and 58% of all stocks were rising. New lows and new highs were equal at 90 each. The number of new lows continues to rise which is sending cautionary signals advising that the NASDAQ may pullback further if the number of new lows does not drop back.
Market Direction Technical Indicators At The Close
Stock Chart Comments:
The S&P did not fall as low as yesterday but still did manage to reach the 0 day moving average. The close today places the S&P in a pattern that shows declining highs for the past 3 days. The market is also moving sideways with a slight bias lower as it moves away from the Upper Bollinger Band.
The Upper Bollinger Band is continuing to climb higher and is above the 200 day moving average indicating there is more upside to the rally, still to come. The 20 day moving average and 50 day moving average are moving higher. The 20 day ha crossed up and over the 50 day moving average which is an up signal. The closing candlestick on Wednesday is neutral on Thursday.
Support and Resistance Levels:
These are the present support and resistance levels. These levels have not changed since January 2015.
2100 is resistance.
2075 was light support and is also resistance. Below that is 2050 which is resistance.
Stronger support was at 2000 which is still acting as resistance.
Weak support is at 1970 while stronger support is at 1956 and technically it is more important than 1970 for the market. 1940 is light support as is 1920. 1900 is more symbolic than anything else.
1870 is support. 1840 continues to be support. The 1820 level is light support. The strongest support level is at 1800.
1775 and 1750 are both 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 all-time high of 2134.72. This would be the biggest correction since the plunge in 2011 of a 20% pullback. A pullback to 1750 from the all-time high would be a drop of 384 points for a decline of 18%. A pull-back of that size would definitely stun investors and bring to question whether the bull market which started in 2009 is finished. From 1750 it is an easy slide to 1600 which was near the market top in 2007.
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and moving sideways.
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 Feb 16 which was weaker by the close on Wednesday.
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 positive and falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and moving higher indicating prices in general are moving up. The signal at the close was a positive 7.33. Much more above this signal and often the market will begin to pullback further.
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 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 and is extremely overbought.
Market Direction Outlook for March 10 2016
For Thursday the two of the technical indicators, the stochastic indicators, are signaling down. All the other indicators are still positive and there are signs that the market could try to recover the 2000 level on Thursday.
If the market drifts for another day, it will move lower. The S&P on Thursday needs to close higher. The indicators for Thursday are pointing 4 to 2 for the market to continue higher, but many of the technical indicators are starting to weaken. Therefore the market needs to move up soon or risk pulling back further to try to find support.
There are though signs that on Thursday we could see the S&P push slightly higher or weakly higher. I am expecting a rally to take out the 2000 level, again and Thursday might see that rally gain some strength.
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