A number of events pushed the rally today. Retail sales data showed consumers are busy buying and July sales data was revised higher. Meanwhile a lot of analysts expect the Fed to not raise rates in September and not for the rest of the year, although the retails ales data today would suggest otherwise. Most analysts now believe if the Fed fails to raise the interest rate stocks will experience a “prolonged” rally. I am not as convinced although I do think no matter what the Fed decides, a rally may occur anyway which will be short-lived.
Anyway some of the numbers today were impressive with GE up 2.14 percent and Microsoft up 2.18 percent. Apple also closed near its high for the day up 0.84 percent. Another interesting event today was news from Thomson Reuters that the S&P which is now down 4 percent for 2015, is trading at 15.4 times upcoming earnings, which they pointed out is below the historic norm of 15.6 times anticipated earnings. What they did not point out is if anticipated earnings are lower again, then the S&P is trading above the historic norm at more than 17 times earnings. A lot depends on the quarterly revenue numbers coming up in October.
Market Direction Closings For Sep 15 2015
The S&P closed at 1,978.09 up 25.06. The Dow closed at 16,599.85 up 228.89. The NASDAQ closed at 4,860.52 up 54.76.
Advance Decline Numbers for Sep 15 2015
Volume today came in at 3.2 billion with most of the volume in the morning and the last hour of trading. Up volume was 79% of all trades and 67% of all issues were advancing. New lows are still high at 92 and new highs were just 18 but that is an improvement over the past few days. While certainly not strongly bullish, the up volume and the number of stocks advancing was good to see ahead of the Fed’s interest rate announcement on Thursday.
Market Direction Technical Indicators At The Close of Sep 15 2015
Let’s review the market direction technical indicators at the close of Sep 15 2015 on the S&P 500 and view the market direction outlook for Sep 16 2015.
Market Direction Technical Analysis for Sep 15 2015
Stock Chart Comments:
Today’s rally pushed the closing candlestick above the 20 day simple moving average (SMA) for the first time in 19 trading days. The 50 day is continuing to fall below the 100 and 200 day moving averages. The Bollinger Bands are moving toward forming a possible Bollinger Bands Squeeze by early next week unless the S&P can retake the 2000 level and hold it.
The S&P broke through the 1956 support level and closed above the 1970 support level.
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 was at 1970 while stronger support was at 1956 and technically it is was more important than 1970 for the market. 1940 is light support. 1920 and 1900 have very little if any 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.
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: Momentum is finally turning positive but only by a small margin.
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 Sep 10. Today the buy signal gained some strength.
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 which is a bit disappointing considering yesterday it was rising despite the sell-off.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal remains negative and is still pushing sideways.
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 Sep 16 2015
Technically we have 4 indicators pointing up for stocks and 2 indicators pointing lower. We should see some possible selling at the open following today’s gains but in general Wednesday looks to be positive even if only slightly. As Wednesday will be the day before the Fed’s Interest Rate Announcement on Thursday, we could see a fair amount of sideways action but looking at the technical indicators and the volume today, Wednesday looks like the market wants to close positive ahead of Thursday’s announcement.
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