The outlook for Market Direction today was for the market to continue to push higher but in my market direction outlook from last night (Nov 27) I also wrote that the volumes, price and overall market action are showing that profits are being taken here. While that does not mean the market direction will shortly turn to down, it does mean that many fund managers are of the opinion that taking some profits here is warranted.
That has to mean that many fund managers are thinking that the market direction up may be weak for the remainder of the year. Indeed even if the market direction is higher into the close of the year but only by a couple of percentages, taking profits now is definitely a strategically good move. No one will ever get out at the top and in at the bottom on market direction moves. Instead the focus is getting in while momentum is up and getting out before momentum changes to down. If that is their thinking, they could be right.
S&P Daily Market Direction Action
If we look at the past few days you cans see that in general the market direction has turned sideways. If I add in the default Bollinger Bands you can see that the market is still clinging to the Upper Bollinger Band but not breaking through it. The resistance at 1800 for the S&P is even more pronounced because:
- it is the end of the year for many fund managers
- the market direction has rallied nicely from early October
- the window-dressing I mentioned many times this past fall is coming to a close
- many fund managers see the sideways action as perfect for reducing their stock holdings
- some investors will be looking an taxes and taking action to sell losers and winners to balance their tax burden
Overall then there are many reasons the market direction is stalled.
Market direction momentum is also flat. It is not negative, just simply, flat.
One of the better market direction indicators, MACD is showing just how flat the market direction has been for 11 trading days or over two weeks now. The divergence readings above show how the market direction is slipping back and forth but none of the numbers are showing strength for a move higher or a move lower. Indeed the last several days has seen a decline in the divergence readings as you can see in the chart above. With MACD intraday, giving a .09 readings we are pretty well neutral in market direction at present.
Market Direction Into The Close for November 27
Into the close I am still expecting to see the market end slightly higher. Unless sellers step in for the last few minutes like yesterday, the S&P 500 has a good chance of closing around the 1805 to 1806 level. Who knows, perhaps in the last few minutes buyers will step in today just as sellers did yesterday and push the S&P 500 back up to a new high. While that may seem somewhat unlikely for the market direction at present, it actually has a good chance of happening.
Overall though the thing to concentrate on is that the market direction is still up. So while there is obviously selling going on by the fund managers and large institutional investors momentum is still to the upside, but lightening some positions or at least placing stops on some trades and raising a bit of cash here is certainly a practical step to take at present.
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