The outlook for today, Oct 5 was for markets to move higher by the close but for weakness to creep in ahead of earnings. Instead the reversal from Friday continued unfettered and all the major indexes scored big gains. The S&P closed back above the important 1970 level at 1987.05 while the Dow closed 250 points away from retaking the 17000 level.
Market Direction Closings For Oct 5 2015
Markets closed near their highs on Monday. The S&P closed at 1987.05 back above the 1970 support level. The DOW closed at 16,776.43 up 304.06. The NASDAQ closed at 4781.26 up 73.49.
Advance Decline Numbers for Oct 5 2015
Volume on Monday was pretty well unchanged at 4.3 billion shares with new 52 week lows at just 20. New highs came in at 39. This marks the first time in weeks that new highs outpaced new lows. It is a good sign for stocks to continue to rise. Up volume was 87% of all volume traded today. Definitely the day belonged to the bulls.
Market Direction Technical Indicators At The Close of Oct 5 2015
Market Direction Technical Analysis for Oct 5 2015
Stock Chart Comments:
The big advance today placed the index back above the 20 day simple moving average (SMA) and within reach of the 50 day moving average. The 200 day is still leading the market and the 100 day is falling lower along with the 50 day, but today’s development is the first indication in two weeks that the trend may be changing to up as stocks head into earnings. The Upper Bollinger Band is started to turn higher as the Bollinger Bands Squeeze begins to erode.
The S&P broke through 1956 and 1970 resistance levels and they are back offering support for the market direction up, once again.
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.
2075 was light support. Below that was 2050 which is also was light support. Stronger support was 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.
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 rising.
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 was confirmed 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 and overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and rising which signals a change back to up for stocks.
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 up 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 pointing up for stocks.
Market Direction Outlook for Oct 6 2015
For Tuesday Oct 6 the technical indicators are all positioned positively for stocks to rise further. After such a strong rally today and after 5 days of rising stocks, a breather on Tuesday will not be surprising. As momentum indicators now are signaling overbought for the market we should see some weakness on Tuesday. Therefore I am looking for some weakness, especially in the morning. The day though should end higher for the S&P 500.
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