Once 1700 broke on the SPX my outlook was for the SPX to drift down to the 1680 level. My view has not yet changed. Today I have been in and out of the market direction portfolio as I try to set it up for this move lower. Trading the Spy Put Options today is much simpler but then it should be as it a simple day trade using the ultimate oscillator as the guide. Let’s look at the market direction intraday today.
Intraday Market Direction Action S&P 500 – Sep 25 2013
The one minute chart below shows the problem. In the morning the S&P drifted lower. I got caught on this with the market direction portfolio and took another loss although this one was a lot smaller since I tightened up the stop-loss being used. The market tried to rally back late in the afternoon but then you can see the problem that once more developed. The market set up lower highs once the rally back ended shortly before the noon hour. Around 1:11 I bought back into the downside of the Market Direction Portfolio and I am still holding as of writing this intraday outlook. Meanwhile the drop before 2:00 pm brought the S&P back to 1692. We are now 8 points below the 1700 and I do believe we are going to drift down to the 1680 level. At that point I will reassess.
Market Direction Outlook Intraday
Intraday the market direction outlook is still weak but once again not overly so. I won’t be surprised to see the market try to push back up in the later afternoon but then sell lower. There are three problems the market faces right now, Syria, Debt Ceiling and Fed Tapering. We will shortly move into the next quarterly earnings and that might push stocks up in anticipation of those earnings.
For this reason I am using very tight stops for this downturn and I will not be surprised if the downturn doesn’t last.
1680 Level
The 1680 level is the next important support level for the S&P 500. The SPX had very little support at 1700 which is why it broke so easily. 1680 though has a lot more support. Breaking it will not be healthy for the market direction and I think if we get down to 1680 it won’t be easy to break through unless there is a strong catalyst to the downside.
Debt Ceiling
My personal opinion is the Debt Ceiling is the bigger problem for stocks at the present time. Syria and Iran (I will lump them in together) are a problem but the Middle East is always a problem. The Debt Ceiling concerns investors because, while everyone believes it will get resolved because it “has to be resolved”, there are always surprises that can erupt and politicians in general seem to create more issues than they can resolve. So right now I think a lot of this weakness is the debt ceiling. Look for a big bounce back if there is a positive announcement on the debt ceiling so keep stops tight and take profits on downside positions. I know I don’t want to get caught on a big jump back up.
Market Direction Close Today
For the close today I am looking for a struggle to regain a footing and a failure for that to occur and a lower close than today’s open. Right now market direction is adrift like a boat with a lose anchor. I am not expecting this to last too long but the market still looks like it will drift down to 1680 or certainly close to it. The Spy Put Options is the best way to trade this weakness at present.
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