Market Direction this morning did not see a rebound in valuations but instead saw selling enter the market as investors began to fret the next financial event, the debt ceiling. President Obama yesterday made it clear that he is refusing to discuss debt reduction and trimming of any programs as part of the debt ceiling issue. The Republicans under Boehner seem to be still upset over the last minute fiscal cliff resolution. Whatever the case it’s back to the “same old” for both sides and apparently for investors. In the last debt ceiling fight, the stock market direction fell around 16% so let’s see what happens this time around. Whatever the case I’ll be there to make a profit despite whatever the market direction ends up doing.
Market Direction and US Banks
This morning as well bank earnings results that start tomorrow have investors on edge and dropped market direction right at the start of the day. Wells Fargo (WFC) results were not well accepted by analysts and investors who saw holes in lending which meant poor returns than expected although Wells Fargo put on a brave face advising clients that they “would take these numbers any day of the week” and felt the returns looked excellent. But it set a tone that has investors skittish about market direction going into tomorrow.
Market Direction and Apple Stock
Meanwhile Apple Stock collapsed under $500 today and the debate rages on whether this is a great chance for investors to get into Apple Stock for another leg back up OR whether the stock will be moving lower. Personally I think the direction is lower. Analysts are no longer talking $700 plus for a stock price but now refer to the run back to $600 or $650. This tells me that overall even if earnings are excellent next week, they will have to be spectacular to regain momentum. A lot of investors do not understand momentum but once investors have their confidence shaken they shy away from a stock leading to more weakness. That weakness then leads to more selling and more selling leads to even more selling. Suddenly Apple Stock could be testing $400.00 where there is a lot stronger support. These are big drops in values for Apple Stock and will impact a lot of investors. Let’s hope I am wrong.
Market Direction S&P 500 Chart Intraday
Let’s look at the S&P 500 market direction chart intraday to see what it can tells us about the overall market action. Below is the 5 minute S&P 500 chart and at noon hour the chart is doing opposite of what I had thought. I thought in last night’s market direction that the S&P 500 would open higher, then fall on selling and then rise to finally close just a bit higher than Monday’s close. Instead we have the opposite. Selling first thing dropped the S&P 500 and now the market direction is trying to climb higher. I am not sure this will hold here and we will see a new higher high at the end of the day. I do think there is still strength but investors’ confidence is shaken with the drop in Apple Stock, bank earnings starting tomorrow and now the gloves off on the debt ceiling fight,
Market Direction Intraday Jan 15 2013 - 5 minute chart
Market Direction Dow Intraday Chart
The Dow jones has an even more impressive market direction chart with the bigger drop this morning and a steady rise until at 12:40 the Dow is positive by a very small margin. These types of charts are bullish for stocks but investors are definitely nervous.
Market Direction Dow Jan 15 2013 - 5 minute chart
Market Direction Outlook For The Remainder Of The Day
For the remainder of today (Jan 15 2013) I won’t be surprised to see some selling going into the afternoon. If the market direction manages to close in the green I doubt it will be very high. Investors are nervous and they are willing to wait until the earnings start again tomorrow. They are also wary about the debt ceiling fighting and how it could turn out. In the end there has to be a resolution of some kind and that’s what investors are “hanging their hats on” by staying in the markets. But the market direction drops in the morning are a clear signal that caution remains warranted and so I am Put Selling only where there are decent dips and the put premiums on my favorite stocks warrant the risk at this point.
The underlying market direction current is higher, but it is rare when that road isn’t a rocky one. The VIX Index though seems unconcerned about market direction, hardly budging this morning in the selling to start the day. But it doesn’t take much to throw volatility back into the markets and that’s when option trading against both the market direction and stocks is always the best.
Internal Market Direction Links
Understanding Short-Term Signals
Market Direction Candlestick Daily View (Members only)
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