The market direction outlook for today was for stocks to rally in the morning near the open and then either turn sideways or pullback. Instead it would seem that strong earnings from Google as well as Russian leader Putin’s comments that a ceasefire should be called in the Ukrainian fighting put a floor under any more selling.
Unfortunately this hammered two of my trades this morning. One trade in the SPY PUT options I thought I could save by adding more put options as the trade ran into trouble. This only made it worse and in the end I had to close them for a loss. Meanwhile the first market direction portfolio trade was also caught by the upturn and had to be closed and then switched back to up.
S&P Market Direction – Intraday
The one minute intraday chart below shows the expected opening bounce. The market then moved sideways and on one of the spikes I entered the SPY Put options trades and the market direction portfolio trades to the downside. It was a mistake. After an initial couple of wins, due to the market direction remaining soft, I noticed that the trend appeared to be more sideways than down. I got out of the market direction portfolio SDOW trade as the market moved higher and took a loss, but I bought the upside of the market direction through the UDOW to recover the losses.
Meanwhile you can see that the direction was up after the sideways motion. From there the market made a high above 1974 and then pulled back to 1972. I won’t be surprised if stocks end the day around the 1972 valuation.
1956 Support Level
Each evening for the past week I have discussed the importance of the 1956 support level. Yesterday it was broken through although the market closed above it. I indicated that while we could see a bounce off that level this morning, I felt there was a good chance stocks could push lower than 1956 early next week. That may actually not be the case. It is hard to judge at present but investors obviously are still bullish and continue to look to the earnings as a sign that stocks have further to rally. The reluctance on the part of investors to sell out is obvious just by the lack of volume yesterday during the worst down move since April.
1956 then continues to grow in important for this ongoing rally.
Market Direction Outlook Into The Close
So was yesterday’s selling just a reaction to the Ukraine crisis and nothing more? The IWM ETF which represents the Russell 2000 is up 1.36% intraday for the biggest jump in weeks. Indeed the selling could have been just a reaction and perhaps the clue was the low volume yesterday, considering the big selloff. Nonetheless we will have to wait for the close to get a better outlook as to where stocks are headed next week.
Into the close the S&P may try to hold around the 1972 level which will be bullish for next week. If however stocks fall back and close around 1960, that will set up the S&P for a lower day in general for Monday.
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