The outlook for stocks for today was sideways but still up. The biggest push behind stocks on Monday were the financial stocks. The morning open saw stocks push higher and then basically trend sideways and lower. They closed well off the highs of the day. The problem on Monday for stocks was poor volume and market breadth.
Advance Decline for May 4 2015
On Monday volume was poor at 3.1 billion shares much of which was at the open and then at the close. 61% of volume was to the upside with 38% to the downside but there were just 54 new highs. New lows though came in at 12 which again shows little chance stocks on Monday were going to drop by much.
Market Direction Closings For May 4 2015
The S&P closed at 2,1114.49 up 6.20. The Dow closed at 18,070.40 up 46.34. The NASDAQ closed at 5016.93 up 11.54.
Market Direction Technical Indicators At The Close of May 4 2015
Let’s review the market direction technical indicators at the close of May 4 2015 on the S&P 500 and view the market direction outlook for May 5 2015.
Market Direction Technical Analysis for May 4 2015
Stock Chart Comments:
The S&P closed well of the highs of the day on Monday but held above the 20 and 50 day moving averages. The SPX is well within range of setting another new all-time high for stocks.
Support and Resistance Levels:
These are the present support and resistance levels.
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 positive but dropping.
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 April 30 which was never confirmed. On Monday May 4 MACD issued a weak buy signal which has to be confirmed.
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.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change is turning back up but there is no actual change. This move on Monday is placing the Rate Of Change back on a sideways trend.
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 has a weak up signal in place for stocks.
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 also pointing higher for stocks and confirmed Friday’s buy signal.
Market Direction Outlook for May 5 2015
The technical indicators have changed to 5 that are positive and only 1 that is trending sideways. Of the positive indicators, 3 issued up or buy signals.
Despite what appears to be a possible turn back lower, the indicators are supporting another move higher on Tuesday.
While my personal outlook is for stocks to have another sideways day with a bias lower, the indicators are signaling that stocks will move higher on Tuesday. I’ll have to disagree with the indicators but in general they have been far more correct in their Market Direction Outlooks than I.
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