Market Direction Outlook For First Week of November – Staying Cautious

Market Direction last week was not encouraging. Just when it looked like the market direction was going to change from down to up, Friday’s unemployment numbers and the Presidential election on Tuesday was more than the market could handle. Market direction took a nasty turn lower in the afternoon. Investors remain nervous and with more uncertainty until after the election we could see the market direction stall here. Part of the problem stocks are also facing is the rise of the US Dollar. Presently the US Dollar is pressuring stocks and commodities alike. The price of oil continues to decline which shows the lack of expansion in the world’s economy. While consumers cheer lower oil and gas prices, it is also a warning that the global economies are continuing to slow.

Meanwhile on Friday Apple Stock continued on its path lower and closed at $576.80 down another $19. Analysts are starting to worry as more articles are being written about what could be wrong with Apple Stock. However Intel Stock closed above $22 although it was much higher earlier in the day before selling arrived on the scene pushing the market direction into a full retreat.

Market Direction And Give Backs

When market direction rallies like it did on Thursday and then gives it all back on Friday, it is a definite warning signal. Nervousness among investors is continuing to hurt stocks. The NASDAQ fell back below 3000 and failed to hold the 200 day moving average. This is another warning signal.

Market Timing Indicators From Nov 2 2012

There are some interesting developments in the market timing indicators. Momentum was turning lower at the close of trade on Friday.

MACD however, while still negative has increased both of the last two days.

The Ultimate Oscillator turned back negative on Friday.

Rate Of Change is still negative but lower on Friday.

The Slow Stochastic however is still signaling that market direction will be higher later in the week.

Fast stochastic on the other hand is signaling lower prices for the start of the week.

Market Direction For Nov 2 2012

With both the fast and slow stochastic pointing in different directions, the nervousness of investors is obvious. The market direction is not sure which way to turn and the market timing indicators are confirming this ambiguous stand of the market.

Market Direction Outlook for the first week of November 2012

Give backs like Friday are never pleasant for the market direction and I do believe the markets will now pull back through the 100 day moving average. This is a time to be cautious while stocks wait for Tuesday’s election. In the end I am not sure it will matter who wins the election. It would appear that the market just wants the uncertainty to be taken away. We could see a rally after the election but it may be short-lived.

Stocks need a reason to push market direction higher. Right now there is not much reason. I will be more cautious going forward with my Put Selling until I get a clearer indication which way the market direction is going to head. Meanwhile I noted that the market direction portfolio on Friday was stopped out. It should be interesting to see what William does next.