The market direction outlook for Monday was for the market to give us a positive close. I wasn’t looking for much of a gain, but simply a day to consolidate and decide whether the gains from Friday will be held. As explained in my market direction outlook on the weekend, December, according to the Trader’s Almanac is one of the best three months of the year. The other two are November and January. December holds the record of having the best returns by month end over 80% of the time over the last 60 years. So keeping that in mind, all we wanted to see today was the market give a positive close and give nothing back from Friday’s gains. Let’s take a look at the intraday action.
Market Direction S&P 500 Intraday For Dec 9 2013
The market direction opened with only a slight pop and then investors pushed the S&P to 1811. At that point sellers stepped in and the market was pushed quickly lower. By 10:30 the market had put in the morning low. This was a typical pattern of the last rally before the market sold down last week. Today we see that the pattern returned. This makes the Trading For Pennies Strategy extremely easy to trade.
Shortly before the lunch hour the market was back at 1811 but could not hold the new high. The next pull back stayed above 1808 and investors tried one more time to break through. After Friday’s big gains though there just was not enough strength in the market. The rest of the afternoon the market drifted lower with the S&P closing almost where the market had opened that morning, just above 1808 and setting another new record high close.
The NASDAQ Market Direction
I usually follow the S&P on a daily basis but I also do take time out to look at the other indexes. I thought I would share what I saw with the NASDAQ today. The morning open saw the NASDAQ open higher and then push up to the 4080 level before selling lower. From there though, investors did not try to retest the 4080 level again. Unlike the S&P, investors stayed trading in a very tight range on many stocks. This kept the NASDAQ index in a sideways pattern for most of the day. By mid-afternoon the NASDAQ also started to fade, just as the other two indexes did. But the move lower was small and the close saw the NASDAQ with a very slight jump which kept the index positive into the close. With the NASDAQ still leading stocks it was nice to see this index not give back much ground today.
Advance Declines For Dec 9 2013
Advancing issues were equal with declining ones as 48% of stocks were advancing while 38% were declining. 165 stocks made new highs while 110 made new lows. It’s not often we get equal number of advancing and declining stocks and it shows the extent of the sideways movement today in stocks.
Market Direction Closing For Dec 9 2013
The S&P 500 closed at 1,808.37 up 3.28 and setting another record high close. The Dow closed at 16,025.53 up 5.33. The NASDAQ closed at 4068.75 up 6.23. IWM ETF closed at 112.45 down just .03 cents.
Market Direction Technical Indicators At The Close of Dec 9 2013
Let’s review the market direction technical indicators at the close of Dec 9 2013 on the S&P 500 and view the market direction outlook for Dec 10 2013.
The most important support line in the S&P 500 at this time in the ongoing rally remains 1750. That support line is holding the market direction up at present and that has not changed. The bounce back on Friday established a second level of support at 1780 which while light, is nonetheless technically important. The market direction in this last little correction reached 1779.09 intraday on Dec 4 but still closed above 1780. Technically then 1780 was not broken by this correction. 1780 has become support. Any move lower by the S&P 500 should stop around the 1780 level. I am not expecting a move lower but should it occur the 1780 level such a pull back should stop to keep the present trend intact.
For Momentum I am using the 10 period. Momentum has been the best indicator during this recent correction. Today momentum was slightly lower. It remains hovering just above the neutral area which is a reading of 100. The present reading continues to support the sideways motion.
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 Friday Nov 29 when MACD was slightly negative. MACD is still negative again today but did rise higher from Friday.
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 in positive territory but moving sideways, which at present is fine and supports a push higher.
Rate Of Change is set for a 21 period. The Rate Of Change is still positive but once again pulled back reflecting the mixed day for stocks.
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 up and it gave a buy signal today.
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 signaling that the market direction is up and issued a buy signal on Friday.
Market Direction Outlook And Strategy for Dec 10 2013
Today was more a consolidation day. What investors needed to see today is a green close and none of the gains from Friday given back. Both of these occurred in all three major indexes. Only IWM did not and with a loss of just 0.03 cents it is more neutral than down or up, which is fine for the day after the big gains on Friday. With the gains held today from Friday what we want to see now is some follow through where stocks begin to push up, even marginally.
The market direction technical indicators are primarily positive. Only MACD continues to be negative. Momentum being so close to neutral is a big concerning but hopefully we will start to see more buying tomorrow. Presently the consensus from the market direction technical indicators is that stocks are set to move higher on Tuesday.
I traded a number of positions today including ADM, ABT, JNJ and MCD. I announced these on my twitter account but did not have time to send out an email. I also did one Trading For Pennies Strategy trade on the SPY ETF today which I will write about tomorrow and send out an email at that time.
For tomorrow then, I am looking for a follow through to confirm Friday’s big move up. Investors remains a bit wary of the jump on Friday but by moving higher on Tuesday it will provide evidence to investors that the move up is still intact which should bring in more buyers.
For tomorrow I am looking for a move higher even if marginally.
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