Market Direction Outlook For Apr 30 2013 – Profits Ahead

The Market Direction outlook on the weekend for Monday was for some weakness in the morning and then a push higher throughout the day. There was not much weakness in the morning as the market direction opened up higher and then pushed up until around 2:30 and then drifted down with one last attempt to push to a higher high at the close which failed. So another up day for stocks and now the NASDAQ is sitting at a 12 year high, and both the Dow and the S&P 500 are within a couple of points of breaking into new all time highs.

The rumor mill was working overtime today as commentators discussed the possibility that the Fed programs will continue right through 2014. Added to that were stories of adding more liquidity to try to get inflation higher and then rumors abounded that the ECB will reduce interest rates half a point and apply even more liquidity as well. It seems that everyone wants to get into the liquidity game. All of this will mean almost non-existent bond yields for at least another year or two and higher stock prices.

Investors today loved the rumors and pushed stocks higher. Now the question for the S&P 500 will be breaking through into a brand new high possibly as early as tomorrow and with the Federal Reserve still “backing” the stock market with the so-called “Bernanke put”, any correction at this point seems to be shallow at best. That may change as we enter into the summer period but for this week at least the chance of any dip seems remote so I would expect stocks to move higher.

Market Direction Closing For Apr 29 2013

The S&P 500 closed at 1,593.61 up 11.37 points. The Dow closed at 14,818.75 up 106.20 points. The NASDAQ closed at 3307.02 up 27.76 points.

Market Direction Technical Indicators At The Close of Apr 29 2013

Let’s take a moment now and review the market direction technical indicators at the close of Apr 29 2013 on the S&P 500 and view the market direction outlook for April 30 2013.

Market Direction Technical Analysis Apr 29 2013

 

For Momentum I am using the 10 period. Momentum is back positive and climbed strongly today. This is a good sign for market direction up.

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 Friday and today confirmed that buy signal which is another good sign for market direction up.

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 is still positive and largely unchanged from Friday despite the big move higher. This reflects the lack of buying into the close which has kept the Ultimate Oscillator primarily unchanged.

Rate Of Change is set for a 21 period. Rate Of Change is positive and climbing indicating that fresh buying was occurring today.

For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is still indicating that the market direction is higher. As it looks out more than a day or two this could be a good sign for the market direction to be higher by mid-week.

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 also is still indicating that the market direction will be up on Tuesday.

Market Direction Outlook And Strategy for Apr 30 2013

This week so far is looking pretty good for stocks to move higher. I will not be surprised to see the S&P make a new high tomorrow. The selling at the close of today and the inability of the markets to hold onto their highs into the close probably means some selling tomorrow morning or possibly some weakness to start, but the market direction should continue higher as the day progresses on Tuesday.

April then will enter the history books as yet another April where stocks moved up in what continues to be one of the best months for stocks. My strategy is exactly as before but I do believe the chance of any serious pullback this week is off the table. Friday presents the unemployment numbers and they could be the only problem for the markets but the Weekly Initial Unemployment Insurance Claims have improved so I would not expect much in the way of bad news for Friday.

Perfect Market Direction for Put Selling

This is the perfect environment for Put Selling. The market direction seems poised to grind higher with shallow dips or corrections along the way but for the short-term the market direction seems solid. With that the case, it becomes a matter of trading among the stronger stocks that are continuing to show good support and staying away from juniors and those of questionable quality. Why risk capital put selling stocks that could lead to assignment when the overall market direction is up and this is the time for bring in profits with limited worry about any impending correction. I believe this is the time to look to the big cap blue chip stocks that pay dividends and keep Put Selling them for returns and a higher level of safety. Add in the odd stock buying when a large dip in a stock occurs and there should be limited problems for the short-term at least. That certainly will remain my strategy for the present.

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