Market Direction Outlook For Feb 15 2013 – Mixed Messages

Market Direction today ended up flat with the S&P 500 dropping during the day and then recovering into the close to push up with another slight gain.

Market Direction Action For Today

Despite market direction being flat it was an interesting day. European economic growth for the fourth quarter showed a larger contraction in the European zone than expected. The belief has been that the Eurozone would should less declines as these quarters are passing, but instead the opposite is happening. The European markets however have had an excellent 12 months in what might be anticipation that the Eurozone contractions would be smaller and short-lived. If the Eurozone continues on this path the European stock markets could pull back even if just slightly. That could negatively impact North American markets. This is obviously a wait and see event, but it is something to keep in mind.

On the jobless front the Weekly Initial Unemployment Insurance Claims fell more than expected to 341,000. Normally this decline would assist the market direction and possibly it did as the markets recovered most of the day’s pullback.

On the stock front the news that Heinz will be bought out by Berkshire Hathaway for $72.50 a share got the stock up 19.9 percent and had investors buzzing with the news. A few other interesting stocks today includes Whole Foods Market that dropped 9.7 percent after forecasting weaker than expected sales for 2013 and Barrick Gold Stock climbed 2.3 percent after taking a 4.2 billion write down on the copper portion of its business and announcing a 3.1 billion loss for the quarter because of the write down. One other event definitely worth mentioning was BlackBerry Stock ended up 7.5 percent after selling off earlier on the news that founder Jim Balsillie had dumped all his shares of BlackBerry stock. So despite the flat market it was certainly a fun day for some stocks.

Market Direction Closings

The S&P 500 closed at 1521.38, up 1.05 points and the Dow closed at 13,973.99 down for another day by 9.52 points. The NASDAQ closed at 3198.66 up 1.78.

Market Direction Technical Indicators At The Close of Feb 14 2013

Let’s take a moment now and review the market direction technical indicators at today’s close on the S&P 500 and view the next trading day’s outlook.

Market Direction Technicals Feb 14 2013

Market Direction Technical Indicators for Feb 14 2013

For Momentum I am using the 10 period. Momentum is back climbing higher again today. Despite all the sideways motion in the market, momentum has stayed positive which is obviously the right move for investors. Momentum is a strong indicator for giving decent market direction outlooks. Throughout this rally momentum has been one of the principal technical indicators to follow. It is back rising.

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 declining and today it is pushing lower. So far in the battle of momentum versus MACD, momentum has been correct. MACD though is often a leading indicator so you never know it could still end up being the correct reading

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 positive and is back climbing into overbought territory.

Rate Of Change is set for a 21 period. Rate Of Change is still positive but again pushing sideways. To an extent this is understandable as the rate of change is telling investors that there really is no change in the outlook for market direction and by and large it is almost unchanged each day this week.

For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is overbought to the extreme and is still signaling that market direction will be lower in a few days.

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 extremely overbought and it is still indicating that the market direction will turn lower. It remains confirming the Slow Stochastic.

Market Direction Outlook And Strategy for Feb 15 2013

The market direction outlook for the next trading day is very mixed. All indicators are pointing to the market direction as sitting sideways. Three have the bias to the downside and three have the bias to the upside. This is perfect for this market as they are evenly mixed. The overall market direction then is still  the same as investors continue to jostle for positions while waiting for the market direction to set a clear trend. But the trend so far has been clearly higher for much of the past two weeks. So perhaps while we have tried to spot a clear direction, there actually has been one – higher.

This again is why I like having a watch list of stocks to follow and use Put Selling as a principal investment method. Despite the market direction uncertainty I can keep adding to my positions and keep growing my profit and income for my portfolio. Some investors may feel that this market is unsafe but that should not mean we cannot continue to invest safely in it. Put Selling offers decent profits and decent protection. For investors who do not want to own stocks, I believe the focus has to remain on Put Selling against rising stocks or certainly Put Selling below support levels. By watching market direction and playing it safe, investors might not get rich in this kind of sideways market direction but they can continue to earn profits and work towards compounding their overall portfolios and that is the purpose of investing, earning and growing capital.

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  • Hi Marty
    I would have to write an article about this. There isn’t enough space in the comment section. I’ll put it on my to do list.