Market Direction today didn’t quite follow my outlook from yesterday’s close. I expected the markets to open up, then pull-back and finally push higher into the close and either close flat or just slightly positive or negative. Overall though the S&P 500 market direction followed much of what I had expected and closed up just 2.25 points. But it started off down, pushed back higher all the way to 3:00 and then sold off into the close. The opposite move in market direction of what I thought investors would do, but the result met my expectations.
Market Direction Action Jan 23 2013
The big news in tech stocks came from Google yesterday that surprised investors with strong earnings. Surprise! Search engines are not dead yet. Meanwhile investors pushed Apple Stock up probably expecting it to follow in Google’s footsteps. But all the signs were there that earnings would disappoint and they did. Investors after hours pummeled the stock and pushed Apple Stock to $460 after hours.
It should be an interesting open tomorrow for the NASDAQ and stocks in general.
Netflix Stock surprised investors by turning in a profit of .13 cents a share versus the estimate of analysts for a .13 cents a share loss.
Meanwhile though market action was for the most part negative. The DOW was up on IBM’s decent earnings as IBM alone added almost 60 points to the overall rally for the day. The advance decline line was negative the entire day. The overbought condition is placing a lot of stress on the market.
Market Direction Closings
The S&P 500 closed at 1494.81 up 2.25 and within a heart beat from 1500. The Dow closed at 13,779.33, up 67.12 points. The NASDAQ was up thanks to Google Stock and Apple Stock as it closed at 3153.67 up 10.49 points.
Market Direction Technical Indicators of Jan 23 2013
Let’s take a moment now and review the market direction technical indicators at the close of today on the S&P 500.
For Momentum I am using the 10 period. Momentum is still solidly positive and is climbing higher. The market direction would have to change drastically to alter thee outlook of the market moving higher in the mid-term. The readings remain solid with Momentum.
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) is climbing higher continuing to support higher prices.
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 down slightly from yesterday but still the overbought reading is extreme. If the market has more days with the advance decline line turning negative the Ultimate Oscillator can move out of the overbought condition without the markets pulling back very far.
Rate Of Change is set for a 21 period. Rate Of Change is still higher still reflecting that the market direction higher remains strong.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is overbought to the extreme and is still signaling that market direction that the market direction has a bias to the upside but there is more strength in the market moving sideways.
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 also extremely overbought but it down a bit from yesterday again due to so many stocks selling despite the indexes moving higher. The fast stochastic is also pointing sideways but continues to warn that the market is very overbought and could pull back from here.
Market Direction Outlook For Jan 24 2013 And Strategy
The market direction outlook for Thursday January 24 2013 is to see a weak start caused by the after hours drop by Apple Stock. There remains enough indicators warning that the market is so overbought that it should move sideways for at least a day or two before resuming the trend up. The earnings of Apple Stock may be enough to force the market direction rally to stall here.
I have no plans to sell any puts tomorrow and I may adjust my Apple Stock Biweekly position but I think perhaps not. I have a lot of cash so if a rescue for my Apple Stock trade is necessary it will not be much trouble. But I want to see how the market reacts tomorrow and whether this will have a slowing effect to the market direction rally. Personally I think the market needs to consolidate to strengthen for the push beyond 1500. With enough consolidation the market direction should be able to hold 1500 if it is broken with strength.
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