The market direction outlook for Thursday was for sideways action with a bias to the upside. All indexes followed through and pushed higher in the morning and then drifted for the rest of the day. All indexes closed near their highs. I am expecting though a bit of selling for Friday which I will cover in a moment. A couple of stocks I wanted to mention first are Clorox Stock which has had a nice recovery and Kraft Stock which announced after hours, a huge revenue jump this past quarter.
Kraft Stock
I have liked Kraft Stock for a long time. Since the spin-off though I have been trading both Kraft and Mondelez which I discussed last night in my market direction outlook. Kraft had a one time huge jump in revenue this quarter which should see the stock bounce higher tomorrow. Any bounce higher might push the stock to the Upper Bollinger Band but I would be waiting before selling puts, if that happens. The stock has a lot of support at the $52 range and this quarterly revenue jump is a one time affair. Recently the stock fell through support and broke to $50.50 before starting to recover. It only took 3 trading days for Kraft stock to break through. That’s not the kind of support I would have expected after 6 months of building support and it shows how nervous investors were. There is no rush to sell puts in Kraft stock. I have no plans to sell puts unless I can get a decent premium for the $52 strike. While that may not happen tomorrow after the news today after the markets closed, I don’t think it will be long before Kraft is pulling back. That will be my entry signal for selling more puts. 
Clorox Stock
Clorox Stock has had a nice recovery and today it reached a high of $87.29. The stock though is having trouble with the Middle Bollinger Band which is actually the 20 day simple moving average (SMA). While Fast Stochastic is still very bullish on the stock moving higher, momentum remains quite negative. Meanwhile the stock has been declining since December and is putting in a series of lower highs and lower lows. This classic signal should be considered. For my trades, this is an opportunity to roll my $87.50 puts lower. Meanwhile if the stock can break through the $88.60 level then there is a good possibility of the stock moving higher. That might be a pretty tall order for the stock so I wanted to bring this stock to the attention of those who may be holding naked puts at $87.50.
S&P Market Direction for Feb 13 2014
Today’s 1 minute market direction chart is fairly uneventful. The S&P pushed higher in the morning and only had a very short pullback or dip around 10:30. The rest of the day the index climbed higher and then turned sideways in the afternoon. It closed near the highs for the day. All in all it was a quite day for the index.
Advance Declines For Feb 13 2014
Today again belonged to the bulls with 71% of stock advancing which is a big move up from yesterday’s 55%. Only 25% of stocks declined which is quite the change from yesterday’s 42% decline. New highs reached 150 and new lows were 81. The new highs are reaching double the numbers of the lows. The trend is still higher for stocks according to the advance decline ratio.
Market Direction Closings For Feb 13 2014
The S&P closed at 1829.83 up 10.57. The Dow closed above 160,000 at 16027.59, up 63.65. The NASDAQ closed at 4240.67 up 39.38.
The IWM ETF closed up $1.43 to $113.90
Market Direction Technical Indicators At The Close of Feb 13 2014
Let’s review the market direction technical indicators at the close of Feb 13 2014 on the S&P 500 and view the market direction outlook for Feb 14 2014.
The 1750 level is holding the S&P up. The market closed today just shy of 1830. The all-time high was back on Jan 15 when the S&P reached 1850.84. The S&P is within striking distance of another new high.
For Momentum I am using the 10 period. Momentum has been the best indicator over the past two months, replacing MACD as the most accurate indicator. Momentum though may not be supporting a push higher. Despite today’s rise momentum turned lower today and needs to be watched tomorrow for any sign that it is not going to support a push higher.
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 buy signal on Feb 11. The buy signal was a very strong 4.56 today.
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 very overbought. This doesn’t mean the market direction will turn down immediately but it does indicate that the move up could stall here.
Rate Of Change is set for a 21 period. The rate of change is negative again today. This is beginning to indicate that a lot of investors are not following this recovery trend higher. A move lower for the rate of change will be a signal that a short-term top could be in place. Just like momentum, the Rate Of Change indicator also needs to be watched.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is signaling again today that the market direction is up and it issued a buy last Thursday.
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 also indicating that the market direction is up for the seventh day and it also issued a buy signal on Feb 6 which helps to confirm the buy signal from the Slow Stochastic.
Market Direction Outlook And Strategy for Feb 14 2014
The Fast Stochastic has been issuing a market direction up signal for 7 straight days. This is not usual and with indicators like the Rate Of Change and momentum not as supportive of the rally as we would like to see, we could see stocks pull back on Friday, especially as many investors will not want to hold stocks over the weekend.
The technical indicators in general though are signaling that stocks are still set to move higher. With the market so overbought however and with momentum turning down today, I believe stocks may want to rest here.
For Friday then I am expecting a rest for stocks which means a possible negative close to what has been a great week for the indexes in general. This will not mean an end to the recovery, but it could last into Monday.
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