Market direction for the past few days has certain been interesting to say the least. It has also been quite profitable for my spy put trades. Market direction though could be about to change after today’s comeback rally from the 1300 level.
While I have my own doubts as to whether or not the market direction can reverse, I have to be aware of what the market timing indicators are advising.
The most interesting S&P chart in a while is the one below.
Market Direction 6 Month SPX Chart On May 31 2012
Market timing contains a number of important components and one of these is charting. The most interesting chart is the 6 month and 1 month charts. The 6 month chart shows the S&P 500 lows and as you can see the lows are climbing.
Market Direction Shows The 6 Month SPX Chart
The climb is more obvious in the 1 month chart below. Today’s bounce created another higher low.
One month S&P 500 chart shows the higher lows after today's bounce from 1300. This is a market timing signal often associated with markets poised to push higher.
While I am pretty doubtful the market direction can climb higher from here, tomorrow is June 1 and historically the market has been up 18 of the last 23 years on June 1.
Market Timing Indicators For May 31 2012
Below are the market timing indicators for May 31 2012 and there are lots of conflicting readings to consider. Momentum while negative is still climbing from yesterday and has climbed most of the week.
MACD (Moving Average Convergence / Divergence) is still negative and remains undecided.
The Ultimate Oscillator which was positive and fallen and is now negative.
Rate Of Change though is back positive which is a first for this tool in some time. While still too early to consider it a signal to buy the rate of change is often a good predictor of things to come.
Sadly though the slow stochastic is now issuing a sell signal. That sell signal is confirmed today by the fast stochastic which yesterday issued a sell signal and continues to flash sell, for investors.
Market Timing Indicators For May 31 2012 show the conflict between market timing tools.
Market Direction Outlook
Overall the market direction still points down but the rate of change is worthy of consideration. Should tomorrow open up and then fall I will not be buying large quantities of spy put contracts because, who knows, possibly the rate of change and the 1 month chart are trying to tell investors that the market direction may finally see a few up days, which the market could badly use.