The market direction today was weak as investors seemed perplexed by the information coming out of the government. On the Syria issue the US seems ready but unsure of how to proceed. This is a complicated issue as apparently different rebel groups are fighting within the country and some are Al Qaeda as well. The Middle East has been a hot spot for centuries and this is not any different. Meanwhile the GDP was revised to 2.5 percent for the second quarter which was a big jump aand the Weekly Initial Unemployment Insurance Claims fell more than expected possibly showing that hiring improved in August.
Investors are unsure what to make of all this. A ground presence in Syria is certainly not the best and could be the most problematic. Air strikes on the other hand are a completely different story. On the economic front things seem to be improving which should be good, but because they mean the Fed could begin scaling back Quantitative Easing early investors are nervous. All in all the day’s action showed just how jittery investors are.
Market Direction Action For Aug 29 2013
Today’s 5 minute chart of the S&P 500 shows the usual pattern of a morning bounce and then an afternoon of lower highs culminating in the S&P market direction turning down throughout the afternoon and closing just above the opening bounce.
The first chart is the 5 minute chart from today. You can see that the market opened with buyers stepping in. They pushed the market up until around 1:00 PM. At that point buying stalled and sellers entered. The S&P 500 then exhibited the old pattern of lower highs. The close though is interesting in that the S&P 500 closed just above the first early morning high. This is typical of a market in trouble. This type of pattern is often seen in a market that is just bouncing back from a sell-off before more selling occurs.
Advance Declines For Aug 29 2013
At the close today advancing issuesup to 61 percent of the market at 2527 and declining issues were 36% at 1507. New lows though were 117 and now highs just 39.
Market Direction Closing For Aug 29 2013
The S&P 500 closed at 1,638.17 up 3.21. The Dow closed at 14,840.95 up 16.44. The NASDAQ closed at 3,620.30 up 26.95.
Market Direction Technical Indicators At The Close of Aug 29 2013
Let’s review the market direction technical indicators at the close of Aug 29 2013 on the S&P 500 and view the market direction outlook for Aug 30 2013.
For Momentum I am using the 10 period. Momentum is still negative but again it is higher today than yesterday as it slowly is trying to recover back to positive.
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 is back higher again but still quite negative with a reading of negative 4.74
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 oversold.
Rate Of Change is set for a 21 period. The rate of change is negative and trending lower.
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 down and it is still extremely oversold.
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 down and it too is extremely oversold.
Market Direction Outlook And Strategy for Aug 30 2013
The market direction is mixed at this point. The outlook is for stocks to move lower but not by much. They could also move higher but again not by much. You can see the problem. Investors are lost just now. The market direction lower seems to be running out of steam but no one seems to want to push stocks higher so there is still no recovery.
Into this environment I bought DXD Ultra Short ETF shares for the market direction portfolio on Thursday but I have a very tight stop and I only bought 2000 shares. Just like most investors I am not sure what to expect next. I do think stocks are wanting to rally again but there is not much conviction.
For tomorrow then I am expecting a mixed market. This might not be of a lot of help to investors but suffice to say I am still investing and doing trades so obviously I cannot think that the market will come apart at this point and I obviously don’t. We need a catalyst to the upside which could be a quick resolution for the Syria issue. That might get stocks back bouncing higher. Meanwhile though there is pressure to the downside which is weighing heavily on the market. This is not a big downside pressure but enough to get the downside back to possibly 1600. Friday then will be interesting.
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