On Tuesday earnings from Walmart and Home Depot juiced the market in the morning. Then oil dropped 2.6 percent to its lowest level since August when prices tumbled to a six year low. This came after US oil inventories showed an increase of 2 million barrels last week alone. That tumbled stocks and ended the rally for Tuesday.
Advance Decline Numbers
Volume was 4.45 billion shares with 69% of that volume moving lower. 62% of all stocks on New York were moving lower. New lows were pretty well unchanged from Monday at 130 while new highs jumped to 30 from 11 on Monday. The advance decline numbers still point to poor market breadth and selling pressure remaining on stocks.
Market Direction Closings
The S&P closed at 2,050.44 down 2.75 and back to 2050 support. The DOW closed at 17,489.50 up 6.49 but far below the 100 point gain earlier in the day. The NASDAQ closed at 4986.02 up 1.40 and almost virtually unchanged from Monday.
Market Direction Technical Indicators At The Close of Nov 17 2015
SPX Market Direction Technical Analysis for Nov 17 2015
Stock Chart Comments:
The S&P closed back above all three major moving averages. It is still below the Middle Bollinger Band or basically the 20 day simple moving average (SMA). .
The 100 day moving average is continuing to turn lower and away from the 200 day signaling more downside is ahead. The Lower Bollinger Band is still moving above the 50 day moving average which is also a bearish signal.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 was light support. Stocks have been unable to stay above this level and push higher on numerous occasions. It remains resistance.
2075 was light support. Below that is 2050 which is light support. Stronger support is at 2000 which had repeatedly held the market up throughout each pullback in January and February but failed under the waves of selling in the last correction. Stocks continue to have trouble holding the 2000 level.
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. 1920 is now light support. 1900 is more symbolic than anything else.
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. So far 1870 has held the market up better than any of the other support levels aside from 2000 which held the market up for months before the collapse in August.
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 of 384.72 points or 18% from the all-time high of 2134.72. 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 use a 10 period when studying market direction. Momentum is negative and falling.
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 sell signal on Friday Nov 10. Today MACD is almost unchanged in its negative reading.
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 negative and falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive but just barely and the signal tonight of 0.83 is pretty well neutral on market direction.
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. It is still oversold.
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 neutral with a slight bias lower.
Market Direction Outlook for Nov 18 2015
Volume picked up today which was nice to see, but the majority of it was to the downside which didn’t help the rally. Much of the selling though was related to the price of oil dropping. The most significant event was the S&P managing to hold the 2050 level.
The technical indicators are 2 neutral, 1 up and 3 down. These are not the type of technicals we should expect if the rally will have hope of moving significantly higher. Wednesday looks more like weakness but not a major drop, just more waffling as the market tries to decide whether to try to push higher or move back to the 2025 level. The bias is for stocks to move slightly lower on Wednesday. So far the rally looks more like a so-called “dead cat bounce”. Volume to the upside has to pick up and stay steady for the market to move back and challenge 2100. That looks unlikely to happen when markets closed on Tuesday.
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