Market Direction today pretty well followed my market direction technical analysis from the weekend. We had the rise at the open on the news out of Europe and then the selling started as the S&P 500 hit another new high finally as the index was within about 10 points of breaking the intraday all-time high of Oct 11 2007 of 1576.09. A large part of the decline was the Dutch finance minister’s comments that the Cyprus “deal” could be a template for Europe’s woes. In other words, tax those with more than 100,000 Euros in banks. A silly comment for sure but investors didn’t like it. All of this gave investors a reason to sell and take profits. I think what is the most amazing has to be that for the first time in probably 200 years it may become better for investors to keep their money in a mattress at home rather than a bank, after all. Who would have thought the day would come when politicians would tax bank depositors. Look for more bad news out of Europe. These politicians are willing to try anything to save themselves from facing the problem with real solutions.
BlackBerry Stock, Apple Stock and Market Direction
BlackBerry stock collapsed 4.5% after a number of analysts including JP Morgan did an about-face and rated the stock a sell. Meanwhile Apple Stock rose during the day and at one point flirted with $470.00. Is $500 on the horizon?
Market Direction Closing Numbers
The S&P 500 closed at 1551.69 down 5.20 points and the Dow closed at 14447.75 down 64.28 points. The NASDAQ closed at 3235.30 down 9.70 points. All the markets closed off their lows for the day which is a good sign for the markets.
Market Direction Technical Indicators At The Close of Mar 26 2013
Let’s take a moment now and review the market direction technical indicators at today’s close on the S&P 500 and view the next trading day’s outlook.
For Momentum I am using the 10 period. Momentum is now negative as today’s selling was finally enough to push momentum lower..
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 still signaling market direction is lower. The sell signal is still active and has increased.
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 still positive but continued to fall today as the selling is pushing the Ultimate Oscillator lower.
Rate Of Change is set for a 21 period. Rate Of Change is still positive and moved higher today for the first time in many days. The rate of change is showing that a lot of investors were active today both buying and selling but the rate of change is telling us that buyers were picking up shares even as sellers were busy unloading them. The last time this happened the buyers were wrong short-term as the market pulled back but within a few days they were proved right as the market direction shifted to up.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is no longer overbought and is signaling market direction is lower. A sell signal that was issued March 18 is still confirmed today.
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 overbought. It is signaling that the market direction is down.
Market Direction Outlook And Strategy for Mar 26 2013
Today I did another strong Spy Put Options trade. History has shown me that as each Spy Put Options trade becomes more profitable it is a sign of growing weakness with the overall market. As well the see-saw action we have seen of one day up 50 or more points and then down 50 or more points, cannot last and the easiest way to handle this is a move lower. Most often the market direction will take the easier road.
On the other side rests the IWM ETF which at the close managed a very small gain of just .06 cents. The importance here though is not the gain but the fact that it managed to hang on and stay on the positive side. As well despite the many stocks in the red other stocks were not, including Apple stock, Coca Cola Stock, Wells Fargo Stock and others.
Meanwhile though the market direction technical indicators are certainly starting to look poor as they continue to point to market weakness. Today the indicators are split with 4 pointing to more weakness tomorrow and 2 indicating that even if there is weakness the overall direction is still up.
The outlook for tomorrow then is for more weakness but I will not be surprised if the market direction tries to push back higher later in the day and close once again either off the lows for the day or even close in the green. I had indicated on the weekend that this week is pivotal for the stock market as we prepare to leave March and move into April. Tomorrow’s market direction may give us a lot more clues as to what to expect for the rest of this short week.
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