Last night the market direction chart for the SPX looked so heavily oversold a bounce was definitely in order. As well all the indexes were below their 200 day moving averages so again a bounce was in order. The question will be whether the markets can begin to stabilize here or fall lower. I still think 1870 will break and stocks will retest 1850 this week. I am still trading but aside from the SPY Put Options, positions are small and only at strikes I am comfortable with. There are though more and more stocks with levels that I am starting to sell small quantities at. I will be posting those in the members sections this afternoon.
SPX Market Direction Intraday 1 Minute Chart
The opening on today saw the market attempt a bounce. Once that bounce ended and the market direction fell again the SPX reached 1,876.18 before buyers stepped back in. Most of the volume now is traders while many buyers for longer-term positions are sitting on the sidelines waiting to see if 1870 can hold. 1870 is strong support for this year, but any kind of panic type selling will easily break through. By shortly after the noon hour the SPX had climbed back to almost 1900 reaching 1,898.71. This though brought out sellers who are sitting trading between these two ranges of 1870 to 1900. Sellers re-emerged and at the time of writing this the market direction while still up, is under pressure from sellers who are sitting holding thin profits that they want filled each time the market direction pushes higher. At the present time this is simply a rally.
Advance Declines For Oct 14 2014 – Early Afternoon
68% of the volume is to the upside as the early afternoon gets underway. Almost 3 billion shares have already been traded and new 52 week highs are up to 29 from yesterday’s 9. New lows have dropped off considerably to 290 but in a bounce that is to be expected.
Outlook Into The Afternoon
Into the afternoon volatility will remain with stocks. The VIX Index is down to $22.60 which is still very high and continues to point to high nervousness among investors. I see no signs of a panic or a washout from the past two trading days so I doubt the bottom has been reached in this recent bout of selling. With the indexes back below their respective 200 day moving averages, even if companies can bring in some solid earnings and revenue numbers, fear always dominates. Right now fears of a global slowdown and of the end of Quantitative Easing this month are keeping investors on the sidelines. I believe we will see a positive close today, but it really matters little whether it is at present levels, around 1888 or below 1880. This is a bounce and a chance for investors to get a breather before stocks move lower. 1850 is I think the next stop and then investors will see whether stocks can hold at that level.
Meanwhile the only item of any technical interest is the high volume by 2:00 PM, which could indicate that investors are selectively doing some buying believing the market at present levels is fairly valued. It is not however undervalued in my opinion.
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