The outlook for Market Direction or today was for the market direction to show signs of weakness. The overall trend remains higher but Monday was to have seen selling which is what has been experienced this morning.
S&P Daily Market Direction Action
Today’s intraday 1 minute chart is below. The 1803 level was the extent of the selling. The second push lower failed to seriously break the 1803 level and that gave investors confidence to step back in and buy. The third period of selling failed to fall back to 1803 and that has resulted in the S&P pushing back up and preparing to challenge 1810.
IWM ETF Watch
The IWM ETF which is the Russell 2000 small cap fund is worth keeping an eye on. The last run up the saw the ETF move up dramatically, has actually seen declining volumes. Friday saw the ETF push outside the Upper Bollinger Band and close above it after making a new all-time high intraday. Today it has fallen with selling. This is worth keeping an eye on. The IWM ETF has been a decent ETF to follow for some prediction of market direction. It has at times actually lead the rally higher in stocks and made successive new highs which has led the major indexes higher. The pullback today is worth noting to see if this is just a one-day repositioning by investors or whether following Friday’s new high, we are going to see further profit taking. If so, the clue will be the Middle Bollinger Band.
I will be watching the close of the IWM ETF and reporting on it this evening.
Statistics continue to point to a continued expansion of the US economy. The Institute for Supply Management index of manufacturing activity rose in November to 57.3. They indicate that this is the highest figure since October which was at 56.4 and the highest figure since April 2011.
On the other side of the picture a survey of 4500 shoppers conducted for the National Retail Federation which was released Sunday claims that total consumer spending in stores and online was expected to fall for the first time since 2006. This seems oddly strange considering the numbers fell in 2008 for the same period. Anyway, this group indicated spending will dip 2.9 percent to $57.4 billion.
Last note to report is that the growing consensus among Fed watchers is that the Fed will not tighten until March 2014 as they want to keep the markets liquid through the next debt ceiling debate.
Market Direction Into The Close for Dec 2
Into the close I am not expecting anything major to happen. Most investors are in a wait and see approach ahead of the unemployment numbers. There is a lack of conviction at present which is understandable. The market direction therefore could remain weak and I would expect marginal losses or gains at best. Sideways is more the action expected which will create more opportunities for Put Selling, spreads and covered or naked calls although naked calls is definitely not my choice at present.
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