Across the board indexes continue to push higher and this morning the S&P 500 broke into new all-time highs pushing past the previous highs. The market direction remains higher and the bears continue to look for reasons to not be invested. This is not 2008 all over again but the bears have a hard time believing the market direction advance. Even the Dow is pushing towards its all-time high of 16,588.25 made all the way back on December 31. Once the Dow breaks through and establishes a move higher it will break the chance of a double top and will help technically to keep the advance alive into April, the last remaining month of the best 6 months of the year.
Market Direction S&P 3 Month Chart March 21 2014
Let’s look at the market direction 3 Month chart of the S&P 500 below. We can see the January high and then the previous high from earlier this month. The new high is nice to see and is helping push the market away from the 50 day simple moving average (SMA), another good sign for further advances. Meanwhile intraday momentum has turned positive. Momentum has been negative throughout this rally back up but we will have to see what momentum is by the close to tell whether there is enough strength to keep the advance moving higher.
Meanwhile MACD is nearing a buy signal on the advance. The Ultimate Oscillator is reaching overbought status which is another sign of the growing strength of the rally higher. While overbought tends to see the markets sell lower to reduce the overbought condition, usually at the outset there are several days of overbought conditions and in a strong rally the overbought conditions can last for days and sometimes weeks as investors pile into stocks.
The last indicator to review is the Rate Of Change. The rate of change turned positive on Feb 24 and has refused to turn negative ever since. It has been an excellent indicator and it has assisted in my selling puts as well as numerous stock trades and the market direction trades. In the downturn just last week, it worked its way lower but stayed positive which kept me continuing to apply capital to trades. It is now turning back up indicating that fresh capital is starting to flow back into stocks, which is common when stocks break out to new highs.
Outlook Into The Afternoon
I had expected some weakness in the morning and then a push higher as outlined in my market direction comments from last night. Instead the morning was stronger than I expected and we could see some flat-lining this afternoon. Any dips in my favorite stocks this afternoon and I will be looking for more opportunities for Put Selling or stock trades. We will definitely be closing at or into new highs on the S&P. My focus is having most positions expire in April as I am expecting weakness after April in the market direction.
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