Market direction today continued lower as the market lost almost 1%. But it would have been a lot worst if it had not been for whispers of the Fed considering turning on the printing presses. It is hard to say how much lower the market may be if it was not for the constant belief by investors that the Fed will print money and push the economy through QE3.
Meanwhile everywhere investors look, the economy appears to be slowing and in some cases stalling out. Earning from UPS were disappointing as was their forward guidance. UPS is a great bell-weather stock and right now the weather looks stormy. After hours, Apple’s earnings disappointed.
S&P Market Direction Hit 1329
The S&P twice during the day came close to breaking 1329. 1325 is not far below. This market direction push back down has been worse than the previous two times the market direction has shifted lower. This rally which ended on July 19 at a high of 1380.39 did not have the same volume or even conviction as the previous rally. I will not be surprised to see the S&P easily sail through 1325 which will mark the end to the present recovery a resumption of the correction.
Market Timing Indicators Show More Selling Ahead
Today market timing indicators at the market close show growing bearish sentiment.
Momentum is falling and negative. MACD Histogram has turned sharply negative. Only the Ultimate Oscillator remains positive and it continues to fall. rate of change is negative but the strongest indicators are again the Slow Stochastic and Fast Stochastic.
The Slow Stochastic is more negative than yesterday’s reading. The Fast Stochastic is very bearish but showing signs of being oversold. There is still room on the downside left, but the market may see a bit of reprieve before more selling emerges.
Market Timing Indicators are becoming decidedly bearish indicating that market direction of the S&P should easily fall through 1325.
Market Direction and Market Timing Summary for July 24 2012
The market direction is bearish and only the fast stochastic is showing signs of the market being oversold, but not extremely oversold. There is little to report here except to indicate that I continue to hold more cash than usual and will continue to look for signs of the market direction changing, but I do believe this pullback will break 1325 and mark and end to the previous rally which started back in June. The market direction may commence a second leg lower to possibly try to retest the low of this correction. There is enough bearish news and an increase in bearish sentiment among investors to push the market direction lower for some time yet. Keeping my fingers crossed that the market direction holds at 1325, but I have a lot of doubt.