My Market Direction outlook for today was for more selling and then a rally up and sideways but a loss at the end. All of this happened but the market direction recovery was fairly spectacular considering how badly the global markets were doing. Japan literally fell apart on the news of China’s slowdown. But the US markets are not like the rest of the world. The economy churned out some interesting numbers today which obviously gave investors confidence to not be selling everything just yet.
Weekly Initial Unemployment Insurance Claims
The Weekly Initial Unemployment Insurance Claims fell which caught analysts by surprise. The numbers are now back below 350,000 which marks a period when stocks rarely go through a severe correction. You can study this intriguing and accurate market timing system through this article. Meanwhile the housing market also brought in better numbers than expected. As well Hewlett-Packard Co shares surged 17.1 percent after HP raised its 2013 earnings outlook following quarterly results that beat reduced expectations. Meanwhile statistics also showed that manufacturing slowed which continues to point to a slow but gradual improvement in the economy.
Market Direction Outlook Chart
At present I am watching two moving averages to assist in timing whether I can safely consider selling naked puts. The first is the 20 period exponential moving average (EMA). The S&P today came close to that average but closed above it. If that average breaks I can consider naked calls on some of my positions. Meanwhile the 50 period exponential moving average (EMA) is still a low way away but a few days of heavier selling could see the S&P 500 back down to the 50 period. I will update this chart as the days pass next week.
Market Direction Closing For May 23 2013
The S&P 500 closed at 1,650.51 down 4.84 points. The Dow closed at 15,294.50 down 12.67 points. The NASDAQ closed at 3,459.42 down 3.88 points.
Market Direction Technical Indicators At The Close of May 23 2013
Let’s take a moment now and review the market direction technical indicators at the close of May 23 2013 on the S&P 500 and view the market direction outlook for May 24 2013.
For Momentum I am using the 10 period. Momentum is positive but moving lower. The strength in the market today helped to keep momentum sideways rather than down.
For MACD Histogram I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9. MACD (Moving Averages Convergence / Divergence) issued a buy signal on April 26 and the signal remains valid but today that signal is on the verge of giving a sell signal. If market direction on Friday is lower, the sell signal should be generated.
The Ultimate Oscillator settings are Period 1 is 5, Period 2 is 10, Period 3 is 15, Factor 1 is 4, Factor 2 is 2 and Factor 3 is 1. These are not the default settings but are the settings I use with the S&P 500 chart set for 1 to 3 months.
The Ultimate Oscillator went from overbought to negative yesterday but today it is creeping back into positive territory.
Rate Of Change is set for a 21 period. The rate of change is falling for the third day signaling that the rate of change iscontinuing to build to the downside.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is signaling that the market direction is lower.
For the Fast Stochastic I use the K period of 20 and D period of 5. These are not default settings but settings I set for the 1 to 3 month S&P 500 chart when it is set for daily. The Fast Stochastic is also signaling the market direction is down.
Market Direction Outlook And Strategy for May 24 2013
Today’s recovery in the market direction could be more technical in nature than many investors realize. After the heavy selling in reaction to the Fed Chairman’s comments yesterday, the market direction down was very oversold. But it was interesting to see the market gap down at the open and then push higher throughout the day. Not all of that was technical in nature. Investors were interested in picking up stocks.
The Market Direction Technical Analysis indicators though are showing that the pressure is more to the downside than back up. While there is no reason for investors to be selling at this point in the rally, the comments by the Fed were enough to push those investors looking for a reason to sell, to get out of the market. For myself I am continuing to sell puts and I have sold quite a few over the past two days.
With Monday being Memorial Day holiday, I do not expect a lot of activity in the market direction on Friday. I think we will see a mixed market direction with a bias definitely to the downside. Next week will be the real test for the market direction once the holiday is over.
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