The morning was spent with stocks testing the 2000 level several times. Twice the 2000 level broke but buyers entered immediately and stocks were pushed back to the 2000 level. While JP Morgan earnings disappointed, Goldman Sacs earnings were down 38 percent hurt by lower commodity prices and lower trading revenue from bonds. However Bank of America beat estimates as had Wells Fargo on Wednesday. As well regional bank, BB&T Corp also beat estimates by 4 cents posting adjusted earnings of 70 cents on revenue of $2.5 billion, an increase of 6 percent. Financials led the market, especially in the afternoon and once the market broke the early morning highs early in the afternoon, the market took off and investors jumped quickly to buy into the rally. By the end of the day stocks indexes closed near their highs.
Market Direction Closings For Oct 15 2015
Markets rallied hard in the afternoon marking again one of the better single days in 2015. The S&P closed at 2023.86 up 29.62 and back above 2020. The DOW closed at 17,141.75 up 217 points and back above 17000. The NASDAQ closed at 4,870.10 up 87.25 points and within 130 points of 5000.
Advance Decline Numbers for Oct 15 2015
Volume on Thursday was almost unchanged from Wednesday at 3.7 billion shares. By the close of the day 79% of all volume was being traded higher. Only 20% was moving lower. New lows were just 28 but new highs rose to 35. The decline of new lows continued for much of this week and points to further advances for stocks.
Market Direction Technical Indicators At The Close of Oct 15 2015
SPX Market Direction Technical Analysis for Oct 15 2015
Stock Chart Comments:
The most important aspect of tonight’s chart is the close by the S&P just above the 100 day moving average. This is now the highest level since the correction of August. The 20 day moving average is turning higher again. The 200 day is still leading the 100 and 50 day but that could change shortly if stocks continue to climb. The move back above 2020 is a good sign for stocks to continue this advance.
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 was 2050 which was also was 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 positive and back climbing.
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 Friday Oct 2. That signal moved sideways today.
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 but starting to rise again.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and starting to rise as well.
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 pointing down for stocks and is still overbought. The down signal 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 is pointing up for stocks, it is very overbought.
Market Direction Outlook for Oct 16 2015
For Friday, 5 of the technical indicators are positive and only the Slow Stochastic is pointing down. The outlook for Friday is for stocks to continue the advance and close again above 2020.
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