The market direction outlook Tuesday was pretty well unchanged from Monday at a 50/50 outlook. Basically very sideways with only a slight chance of either a small positive or negative close. There are of course many reasons for this kind of day but the overbought environment coupled with the market struggling at new highs is one of the big reasons for what is turning out to be a see-saw day.
Other stats from today include the highest consumer confidence numbers since 2007. But regular readers of Fullyinformed.com know what I think of consumer confidence numbers as a great predictor for stocks. Basically consumer confidence numbers have been terrific before many pullbacks that eventually turned into bear markets including 2007 and 2000 so while it’s nice to see consumers “confident”, I look at these numbers as more a precursor to employment reports. That’s because often when the consumer confidence numbers rise, a lot more people are getting jobs, which naturally means they have some money which means they are more confident.
I think the more important numbers are from Merck and PFIZER which both produced good revenue and earnings numbers. On the other side are UPS and Herbalife who are pushing stocks lower. So stocks are stuck in a a see-saw day, but as you can see from the chart below, this could end up being somewhat of a pivotal day for the indexes.
S&P Market Direction Intraday
Today has been a real see-saw day as you can see in the S&P one minute chart below, but what is important is the testing of the 1975 level which has been ongoing all day. 1975 is part of the guidelines I use for my trades and today with this support level being tested and re-tested, it is difficult to say if the 1975 valuation will hold into the close.
I have been writing about the 1975 level for a few days now and as explained in my market direction outlooks after the markets close, 1975 is significant to this ongoing rally, but it is not significant to the overall bull market as of yet.
If though the 1975 level cannot hold, then I will be entering more “downside” trades such as the SPY Put Option trade.
Outlook Into The Close
It’s a tough call into the close today. The market has been drifting sideways for 3 days now as it tries to decide whether 1975 will hold the market direction here and allow the S&P to climb higher. Meanwhile momentum is still positive although at 100.10 it is really more neutral.
The Rate Of Change is still positive but again trending lower.
The Slow Stochastic is definitely signaling market direction lower.
The Fast Stochastic is flashing a larger than usual sell signal which means strength wise, the downside has more strength than the upside at this point.
Declining issues are making up 53% of the volume today while 45% of the volume is to the upside. Volume though is presently poor at 3:00 coming in at just 2.2 Billion Shares.
My own personal outlook is that stocks will close right within pennies of the 1975 level but whether it is above or below I cannot judge. The strength is to the downside but volume being so low tells me investors are not concerned and not selling at present. This means probably a bit lower close but don’t be surprised if we are sitting right near 1975. Tomorrow then could be the more important day.
Internal Stock and Option Trades Links
Put Selling Strategies For Members
Covered Calls Strategies For Members
Profit And Income Strategies Index
Stock and Option Strategies For Members
Stock And Option Trades Explained For Members