FullyInformed.com

Market Direction Outlook For Sept 29 2014 – Rebound Attempt and Then Lower

Sep 28, 2014 | Stock Market Outlook

The outlook for Friday was for a possible rebound rally, but my opinion was that it will fail and the market will pullback. On Friday though, the rally was very strong and pushed the SPX to close above 1980. Analysts though were not convinced and many felt that the rally not only lacked conviction but is setting the market up to fall back this week. Let’s look first at Friday’s intraday action.

SPX Market Direction Intraday Sept 26 2014

The one minute chart below shows how in the morning investors remained cautious and while they did not sell further, they did little buying. The SPX traded as high as 1975 in the early morning but then fell back to just below 1970 before the noon hour. Many investors seemed convinced over the noon-hour that the selling on Thursday has been overdone and by 1:00 PM the market was back rising. Shortly after 2:00 PM the market regained 1975 and then quickly pushed to 1980 and then 1986 before falling back to close above 1980 at 1982.85 for a gain of 0.86%. The market was once more trading within the 1975 to 1980 valuations.

SPX Sept 26 2014 intraday

SPX Sept 26 2014 intraday

Advance Declines For Sept 26 2014

Despite the strong rally, volume dropped by 400 million shares to 2.9 billion. 76% of volume though was up. Still though the number of new lows was 141 while the number of new highs was poor at 16.

The advance decline ratio is telling investors that we need more confirmation that the market direction will start turning out a lot more new highs once again and until that happens, the outlook remains negative for stocks.

Market Direction Closings For Sept 26 2014

The S&P closed at 1982.85 up 16.86. The Dow closed at 17,113.15 up 167.35. The NASDAQ closed at 4,512.19 up 45.45.

Market Direction Technical Indicators At The Close of Sept 26 2014

Let’s review the market direction technical indicators at the close of Sept 26 2014 on the S&P 500 and view the market direction outlook for Sept 29 2014.

Market Direction Technical Analysis for Sep 26 2014

Market Direction Technical Analysis for Sep 26 2014

Stock Chart Comments: The rise of the SPX today retook the important 1975 level but volume was poor. The market though managed to recover back above the important 50 day simple moving average (SMA).

1994 Support: The 1994 level has been retested numerous times over the past two and a half weeks and after having been broken through last week, it is now resistance.

1990 Level: This is light support which broke easily on Thursday..

1975, 1956 Support: Both are light support. 1975 is the more significant valuation at this point and was recovered again today..The rebound rally attempt I was expecting happened on Friday and 1975 was retaken.

1930 Support: Light support is found at 1930.

Strong Support Levels are at 1870 and 1840 (no longer shown). At present I am not expecting any break of either of these levels but the Bollinger Bands Squeeze that is developing could be strong enough to break through the 1870 level as the week unfolds. The strength of the decline today makes it quite possible the 1870 level will be reached which would mark a further 5% correction from today’s close.

The other two support levels not shown in the chart above 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 now the bottom line.

A break of 1750 would mark a severe correction of more than 13% from the most recent high. This would be the biggest correction since April 2012. A pull-back of that size would definitely stun investors at this point and it is not something I am anticipating as there are no signs of any impending correction of that magnitude.

Momentum: For Momentum I am using the 10 period. Momentum has been the best indicator, replacing MACD as the most accurate indicator. Momentum remained negative on Friday.

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 confirmed sell signal on Sept 10.  MACD also continued to stay negative on Friday.

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 was negative on Friday.

Rate of Change: Rate Of Change is set for a 21 period. The rate of change was negative on Friday.

Slow Stochastic: For the Slow Stochastic I use the K period of 14 and D period of 3. As the Slow Stochastic tries to predict the market direction further out than just one day. The Slow Stochastic is signaling down for the start of the week.

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 still signaling up for Monday.

Market Direction Outlook And Strategy for Sept 29 2014

The rally back on Friday took out my positions in the market direction portfolio but as I explained in the investing strategy notes, I bought additional positions on the strong afternoon push higher in the Market Direction.

While Friday was certainly exciting and we could have more movement higher on Monday, the outlook is still lower for stocks. For Monday then I am expecting investors to push stocks up at the start of the day but then move lower. Technically last week did a lot of damage and the market direction up will need more time to repair that damage before moving higher. That means pulling back to support and then building support for another run at the all-time high.

Stay FullyInformed With Email Updates

    Your First Name (required)

    Your Email (required)

    Anti-Spam: Please Answer This Math Question

    I will send you a reply to confirm that you want to subscribe before sending any emails.


    Market Direction Internal Links

    Profiting From Understanding Market Direction (Articles Index)

    How I Use Market Timing

    How I Use Market Timing

    Understanding Short-Term Signals

    Various Market Timing Systems

    Market Direction Portfolio Trades (Members)

    Market Direction External Links

    Market Direction

    IWM ETF Russell 2000 Fund Info

    Market Direction SPY ETF 500 Fund Info

     

    Search

    Select to view all results...

    Generic selectors
    Exact matches only
    Search in title
    Search in content
    Post Type Selectors

    Recent Outlooks

    Stock Market Outlook for Thu Mar 28 2024 – Choppy – Dips Likely – But Higher

    Prior Trading Day Summary: On Wednesday investors returned and snapped up stocks that had drifted lower. The SPX bounced at the open and by the close it was up 45 points to close at 5248. The NASDAQ rose 83 points …

    Morning Investing Strategy Notes for Wed Mar 27 2024

    For FullyInformed Members the morning Investing Strategy Notes for Wed Mar 27 2024 discuss the outlook for Wednesday and comments on a possible correction and what it might entail. There are a number of trade ideas outlined including FedEx Stock …

    Stock Market Outlook for Wed Mar 27 2024 – Unconfirmed MACD Down Signal

    Prior Trading Day Summary: I lost my power shortly after the markets closed. Articles this evening will be shorter if I can post any. On Tuesday trading volume picked up as stocks fell for another day. The SPX closed near …

    Morning Investing Strategy Notes for Tue Mar 26 2024

    For FullyInformed Members the morning Investing Strategy Notes for Tue Mar 26 2024 discuss the outlook for Tuesday. As well there are comments on support levels to watch in the SPX for the week. There are a number of trade …

    Stock Market Outlook for Tue Mar 26 2024 – Still Bullish

    Prior Trading Day Summary: On Monday low trading volumes hindered the chance of a positive close. The SPX saw just 3.4 billion shares traded. This matches the volume on last Friday. While poor , it is also bullish as it …

    Morning Investing Strategy Notes for Mon Mar 25 2024

    For FullyInformed Members the morning Investing Strategy Notes for Mon Mar 25 2024 discuss the outlook for Monday and the shortened week ahead of the Easter holiday. There are a number of trade ideas outlined including FedEx Stock (FDX), Nike …

    Stock Market Outlook for Mon Mar 25 2024 – Dip Likely But Higher Close

    Prior Trading Day Summary: On Friday investors took profits ahead of the upcoming shortened Easter week with indexes sitting at all-time highs. On Friday the SPX closed down just 7 points to 5234. For the week the index was up …

    Morning Investing Strategy Notes for Fri Mar 22 2024

    For FullyInformed Members the morning Investing Strategy Notes for Fri Mar 22 2024 discuss the outlook for Friday. There are a large number of trade ideas outlined including FedEx Stock (FDX), Nike Stock (NKE), Lululemon Athletica Stock (LULU),  and more …

    Stock Market Outlook for Fri Mar 22 2024 – Choppy – Dips Possible But Still Up

    Prior Trading Day Summary: On Thursday all 3 indexes closed at new all-time highs for a second straight day. Volumes remained decent but stocks are seeing some selling as investors are taking a few profits with the indexes at new …

    Morning Investing Strategy Notes for Thu Mar 21 2024

    For FullyInformed Members the morning Investing Strategy Notes for Thu Mar 21 2024 discuss the outlook for Thursday following Wednesday’s FOMC interest rate decision and Fed Chair Powell’s news conference. There are a large number of trade ideas outlined including …

    Stock Market Outlook for Thu Mar 21 2024 – Higher Still

    Prior Trading Day Summary: On Wednesday the SPX, Dow Jones and NASDAQ indexes all closed at new all-time highs. Comments from Fed Chair Powell reaffirming 3 rate cuts in 2024 were still “on the table” was all that investors needed …

    Morning Investing Strategy Notes for Wed Mar 20 2024

    For FullyInformed Members the morning Investing Strategy Notes for Wed Mar 20 2024 discuss the outlook for Wednesday and the latest FOMC interest rate decision. There are also a number of trade ideas outlined including Chewy Stock (CHWY), SPY ETF, …

    Stock Market Outlook for Wed Mar 20 2024 – All About The Fed – Bullish

    Prior Trading Day Summary: On Tuesday the morning started with a dip down to 5131 but buyers were waiting for the dip and volumes picked up. Deep dips in a number of big caps like NVIDIA Stock (NVDA) found ready …

    Morning Investing Strategy Notes for Tue Mar 19 2024

    For FullyInformed Members the morning Investing Strategy Notes for Tue Mar 19 2024 discuss the outlook for Tuesday following Monday’s rally and before Wednesday’s latest FOMC interest rate decision. There are also a number of trade ideas outlined including Chevron …