Market Direction Outlook For Dec 5 2012 – Shift Growing

Market Direction for today was primarily negative but activity was light with only 5.86 billion shares traded. The market direction remained weak with the NASDAQ down 5.51 points, the S&P down 2.41 and the Dow down 13.82. The VIX Index rose 2.9 percent today closing at 17.12. With little economic news attention was focused primarily on the fiscal cliff issue with President Obama rejecting the Republican proposal and indicating that any deal must include a rise in income tax rates on wealthy Americans. Health care had a decent day as it is considered a defensive play.

Market Timing Indicators For Market Direction

There are a few things to report on Market Direction today as there are not significant changes to the Market Direction outlook. Let’s do a quick review of the market timing technical indicators from the close today on the S&P 500.

For Momentum I am using the 10 period. Momentum is still positive but continued to slowly decline as the market direction is sliding 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) is still positive but again is moving lower than yesterday.

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 no longer overbought and is flattening out which will lead either up or down for this indicator.

Rate Of Change has been changed. I am moving to a 21 period for the rate of change which will give a longer-term outlook for the markets. Once the rate of change is set for a period of 21 days you can see that it is negative. With a setting of 21 days for the period, the rate of change indicator signaled a market down on Oct 9 2012 and has not gone positive since.

For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is very overbought but is signaling market direction down as of today’s close.

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 somewhat overbought and is confirming the slow stochastic market direction down signal.



Market Direction Outlook For Dec 5 2012

Tomorrow there are lots of economic reports which might help shift the stock market’s attention away from the fiscal cliff for a few hours. While that could have a positive impact on market direction, the market timing indicators are still showing weakness in this rally and now the Slow Stochastic and Fast Stochastic are signaling a chance to down in market direction. Meanwhile by changing the rate of change to a period of 21 days, the market direction have been negative since Oct 9 2012.

Market Direction then for Dec 5 2012 is for more weakness although there is no signal that the market is about to fall precipitously. However there are plenty of signals developing to indicate that market direction is shifting towards down.

Internal Market Direction Links

Market Timing Articles Index

How I Use Market Timing

Understanding Short-Term Signals

Various Market Timing Systems