The market direction outlook for Monday was for a higher market. The market action in the early part of the day continued to perform as expected. Market direction pushed higher in a choppy session which is far better than a big bounce back higher. A grinding choppy market that moves gradually higher is better for the overall market direction move up than a market direction that jumps higher leaving behind gap opens.
Market Direction Action for August 26 2013
Point A by 11:31 saw the market direction up to 1669.51 which was almost to the 1670 resistance level. From there though the market pushed lower and two further rallies failed, each setting lower highs. Then comments from Secretary of State John Kerry regarding chemical weapon use in Syria unnerved investors and they dumped shares dropping the market direction to a close near the lows of the day.
The morning had been supported by a sharply weaker durable goods orders which came in at a drop of 7.3 percent in July which was the biggest decline in a year. This number investors felt would delay an early scaling back of Quantitative Easing by the Fed which many analysts see as boosting stock valuations.
Market Direction Closing For Aug 26 2013
The S&P 500 closed at 1,656.78 giving back all of Friday’s gains. The Dow closed at 14,946.46 also giving up all of Friday’s gains. The NASDAQ however closed at 3,657.57 giving up just 0.22 points.
Market Direction Technical Indicators At The Close of Aug 26 2013
Let’s review the market direction technical indicators at the close of Aug 26 2013 on the S&P 500 and view the market direction outlook for Aug 27 2013.
For Momentum I am using the 10 period. Momentum is still negative but today’s late day selling did not impact the momentum indicator to push it lower.
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 weak sell signal on July 31 which was confirmed August 7. MACD moved higher again today despite the late day selling.
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 has turned sideways and remains negative.
Rate Of Change is set for a 21 period. The rate of change is negative and trended sideways today.
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 still up and while still oversold, the up signal is strong. As the Slow Stochastic looks out more than a day or two, the up signal means we should see some higher prices 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 is indicating that the market direction is still up for tomorrow. It too is oversold.
Market Direction Outlook And Strategy for Aug 27 2013
Despite today’s weakness and the late day selling, the technical indicators have not altered their outlook. The general consensus is that stocks will once again move higher on Tuesday.
Events such as John Kerry’s comments can have impact on the market direction but once that type of “knee-jerk” reaction ends, the market direction almost always continues on the original path.
The outlook for Tuesday then is for the market direction to move higher which is did not on Monday. Therefore Monday’s rise was delayed somewhat today. Tomorrow should see higher prices in the S&P 500 unless something further develops in the Middle East that spooks investors again.
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