New York Federal Reserve President Bill Dudley’s comments from Hangzhou, China today juiced stocks higher as his comments on his “lower” expectations for growth, were taken to mean no rate hike in March. While many analysts doubted any rate hike would come in March, Dudley’s comments seemed to confirm these expectations. That combined with oil not selling lower, a year over year jump of 6.9% in home prices, a rise in construction spending, and finally super Tuesday which will remove a lot of questions about who is running for the Presidency, were enough to propel stocks to a huge gain on the day.
Index Closing Prices
The indexes closed at their highs today. The S&P closed at 1,978.35 up 46.12 for a 2.39% gain. The Dow Jones closed at 16,865.08 up 348.58 for a gain of 2.11%. The NASDAQ closed at 4689.60 up 131.65 for the biggest gain of the three main indexes at 2.89%.
Advance Decline Numbers
Volume rose to 4.82 billion, slightly above average. By the close 74%% of all volume was moving higher and 80% of all stocks were rising for one of the best days since the October rally. There were 74 new highs and 24 new lows.
The NASDAQ saw 2.08 billion shares traded which is average. 81% of all volume was being traded to the upside and 73% of all stocks were rising. There were 50 new lows and 37 new highs.
Unlike New York, the NASDAQ continues to show some weakness as new lows continue to dominate new highs but overall the move up was positive for all three indexes.
Market Direction Technical Indicators At The Close
Market Direction Technical Analysis for Mar 1 2016
Stock Chart Comments:
The S&P closed above both the 50 and the 100 day moving averages.
This is the first close above the 100 day moving average since Dec 30.
The Upper Bollinger Band is continuing to climb higher. The 20 day moving average is also continuing to rise. The 200 and 100 day moving averages are still leading the market. The closing candlestick today is bullish for Wednesday although often a close at the high can lead to some weakness on the next trading day.
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 now 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 back rising following today’s move higher.
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 is back strengthening.
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 rising into overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive but is now trending sideways. This signals little change is expected at the present time.
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 neutral to down for stocks. It is extremely 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 pointing up for stocks. It is now extremely overbought.
Market Direction Outlook for March 2 2016
The technical indicators are in general supportive of the market advancing further. Meanwhile many of the indicators are extremely overbought which can lead to some weakness either Wednesday or Thursday. Overall the outlook is far more positive than it has been in some time.
Much of the rally was built on the back of the belief there will be no interest rate hike in March. Any hint to the contrary or a change in the direction of oil will change the outlook for stocks.
For Wednesday stocks are overbought and trading could become more choppy. Stocks may trend sideways or even dip in the morning, but a positive close should be expected for Wednesday. Investors hate uncertainty and tonight’s vote in what has come to be known as Super Tuesday, could end much of the uncertainty over which candidates will be running for the Presidency. An end to that uncertainty will assist stocks in rallying further.
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