The outlook for the market direction for today was for the markets to be weak in the morning and then continue the rally in the afternoon. Instead stocks have remained under pressure despite Factory orders rising 1.1% in June and ISM up 58.7%, which is the highest reading since December 2005. The pressure is coming from Ukraine where the Financial Times reported that 20,000 Russian troops are on the border of Ukraine. That coupled with continuing concerns that interest rates will rise sooner rather than later is enough to put stocks under more pressure.
S&P Market Direction Intraday for August 5 2014
The one minute chart for today is below. ou can see that the morning saw some weakness which is what I had expected. The later morning saw a rise but the rise did not break the opening for the day. Instead by noon the S&P was back testing 1930, then fell through to 1925. The rally back was poor and tested the 1930 level again. From there the news out of Ukraine was enough to drop stocks. 1919 was light support which held the market up in the previous downturn but it will not be enough to hold back this tide of selling. The next support level is now 1870 and while there will be rallies back and even today I am expecting the lows of the afternoon to be challenged, I think the pullback is underway.
SPX August 5 2014
Outlook Into The Close
In the close for today stocks are obviously going to be lower. While we could and probably will see a bounce attempt either late in the day or tomorrow, stocks have broken through the 100 day EMA and will, in my opinion, test the 200 day EMA next which is down around the 1865 level.
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