The market direction outlook for Tuesday was for continuing weakness. The Dow fell 94.15 points, the NASDAQ just 8 and the S&P 5.75. The important numbers though are more than the Dow is back below 16,000 and the S&P below 1800. The primary concern is the unemployment numbers on Friday may be strong enough for the Fed to begin tapering in December. I doubt this will occur. As well the market was heavily overbought and is now back to being oversold. I see nothing that is overly concerning at this point, just a market direction that is weak after such a strong run-up which is normal.
Market Direction S&P 500 Intraday For Dec 3 2013
The one minute chart below shows the action for Dec 3. The morning saw a little selling and then a tiny push higher but the 1800 level could not be broken through. Once the market direction could not break free of 1800, selling commenced. There were 3 lows for the day. The third low brought in buyers who pushed the S&P back up to close right at the early morning low.
IWM ETF Direction
The IWM ETF which represents the small cap stocks was pretty well a carbon copy of the S&P. It sold off into the late afternoon but then rallied back to close down just .54 cents to $111.83 for a loss of 0.48%. The technicals on the IWM remain weak showing more selling is probable for Wednesday.
Advance Declines For Dec 3 2013
Declining issues outpaced advancing issues by a wide margin again today with 60% declining versus 38% advancing. The new highs were at just 64 but the new lows were up to 132. Note though that while the declining issues were at 60%, yesterday they were at 70%. Investors could already be starting to tire from selling. Tomorrow should be interesting to watch.
Market Direction Closing For Dec 3 2013
The S&P 500 closed at 1,795.15 down 5.75. The Dow closed at 15,914.62 down 94.15. The NASDAQ closed at 4037.20 down 8.06
The IWM ETF closed at $111.83 down .48 cents for the day.
Market Direction Technical Indicators At The Close of Dec 3 2013
Let’s review the market direction technical indicators at the close of Dec 3 2013 on the S&P 500 and view the market direction outlook for Dec 4 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. Today marked the first day the S&P has been back below 1800 in 6 days.
For Momentum I am using the 10 period. Momentum is still positive and despite today’s selling, it closed still positive although just barely. Still this is a good sign in the face of selling.
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. Today the sell signal is strengthening.
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 bounced back a bit but is still negative.
Rate Of Change is set for a 21 period. The Rate Of Change is positive but now moving lower as investors are being cautious.
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 down.
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 down.
Market Direction Outlook And Strategy for Dec 4 2013
The market direction technical indicators are pointing to the market direction being lower tomorrow. At the close today I adjusted the market direction portfolio. FullyInformed members may want to check the market direction portfolio for the closing change. If tomorrow opens with a big gap up I will pull my stop-loss just before the open and then put it back in place later in the morning.
I am continuing to look for additional Put Selling opportunities as I don’t think the weakness will last very long. I do believe the trend is still back up but going into Friday it looks like investors are remaining nervous ahead of the unemployment numbers.
Overall I see nothing at this point that concerns me. Tomorrow should be an interesting day. While the Market Direction Technical Analysis shows that stocks will be lower tomorrow, my instincts tell me we could see buyers starting to show more interest as stocks push a bit lower here. I won’t be surprised to see the market direction try to bounce back tomorrow either at the open or during the day. Overall though the market direction remains weak and will probably end lower.
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