TSX Market Direction Outlook For May 13 2015

TSX Market Direction Outlook For May 13 2015

The outlook for the TSX on Tuesday was for stocks to move higher even if only slightly. Instead investors were in a selling mood and pushed stocks lower. Global concerns over the Greek bond mess combined with concerns that the latest round of stimulus by the Chinese government will fail to produce any credible growth spread into the Toronto Stock Exchange.

Advance Declines For May 12 2015

Volume fell to just 280 million shares on Tuesday. Despite the terrible volume, trading volume itself on Wednesday was actually above the 30 day average. That is how low volumes have been. Despite the 109 point drop in the TSX volume was surprisingly balanced with 40% of all volume moving to the upside and 52% moving to the downside. New lows came in at 21 versus 14 new highs.

Market Direction Technical Analysis for May 12 2015

Let’s review the market direction technical indicators at the close of May 12 2015 on the TSX and view the market direction outlook for May 13 2015.

TSX Market Direction Outlook for May 12 2015

TSX Market Direction Outlook for May 12 2015

Stock Chart Comments:

The TSX drop today pushed the index back to the 100 day moving average. While volume was historically light, it was up slightly over the 30 day average showing some concern among investors in the day’s pullback.  The TSX is still holding above the most recent low but if it should fall to 14930 it will set up a new pattern of lower lows. While there is definitely a chance this may happen, the 15000 level is continuing to hold the TSX decline.

Momentum: For Momentum I am using the 10 period. Momentum is negative and falling.

MACD: 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 sell signal on Apr 27. The sell signal is strengthening.

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 TSX chart set for 1 to 3 months. The Ultimate Oscillator is negative and moving sideways.

Rate Of Change: Rate Of Change is set for a 21 period. The Rate Of Change is perhaps one of the best market direction indicators for picking inflection points. The rate of change continues to signal that the market is moving lower.

Slow Stochastic: For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is pointing up for stocks. However the up signal is very slight and any movement lower on Wednesday will send this indicator into a sell signal.

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 TSX chart when it is set for daily. The Fast Stochastic is pointing down for stocks after the close today.

TSX Outlook For May 13 2015

Technically the TSX is mixed with a bias lower. It remains critical for the TSX not to fall further. Any further pullback will send the index down to the 200 day moving average. If that happened it would be a significant change in the trend.

For Wednesday stocks look weak and set to move lower. I am only taking on small positions and I am selling far out of the money options.

For Wednesday the TSX looks like it could try to rally to start the day but by the close the TSX should be lower.

Medium Term Trend

Medium Term Trend has changed with the 15150 level breaking. The medium Term Trend for the TSX is lower.


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Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.

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