The Market Direction Outlook for Tuesday was for stocks to move higher but historically the final day of March has not been good for stocks and the Dow in particular. Today gets to be added to that record as another down day for the final trading day of March. April though has a good record since 1950 of being the best month for the Dow. In pre-presidential election years, April has risen even more than usual. One last statistic is interesting. April tends to be one of safer months of the year for stocks not damaging portfolios.
The decline today was blamed on investor jitters over the upcoming quarterly revenue and earnings period coupled with the decline in energy stocks. Whatever the reason, the decline was disappointing after Tuesday’s run-up.
Advance Decline for Mar 31 2015
Volume on Tuesday was higher at 3.4 billion shares but down volume swamped up volume with 66% of all trades moving lower versus 33% moving higher. New highs fell back as well but still closed with 110 new highs versus just 33 new lows. While the bears held some sway today, the new highs still point to the market wanting to push higher..
Market Direction Closings For Mar 31 2015
The S&P closed at 2,067.89 down 18.35. The Dow closed at 17,776.12 down 200.19. The NASDAQ closed at 4,900.88 down 46.56.
Market Direction Technical Indicators At The Close of Mar 31 2015
Let’s review the market direction technical indicators at the close of Mar 31 2015 on the S&P 500 and view the market direction outlook for Apr 1 2015.
SPX Market Direction Technical Analysis for Mar 31 2015
Stock Chart Comments:
The collapse of stocks on Tuesday stunned a lot of analysts but in hindsight the rise on Monday was probably way overdone. The market closed near the low for the day which could set up for a bounce at the open on Wednesday. The index closed just below the 50 day simple moving average (SMA). The other interesting technical tidbit is that the 100 day exponential moving average (EMA)is no longer rising but is turning sideways while the 50 day is continuing to climb. I’ll be watching the 100 day for any signs of a weakening in the signal.
The S&P closed back below the 2075 level which is light support.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 was very light support and is now resistance. 2075 is light support. Below that is 2050 which is also light support. Stronger support is at 2000 which has repeatedly held the market up throughout each recent pullback.
Weak support is at 1970. Stronger support is at 1956.
1870 and 1840 are both levels with strong enough support to delay the market falling and should see a sideways action attempt while investors decide whether to sell or buy.
The other two support levels are 1775 and 1750. I have explained that these two are critical support for the present bull market. While 1775 is important it is 1750 that is the bottom line.
A break of 1750 would mark a severe correction from the most recent high. This would be the biggest correction since April 2012. A pull-back of that size would definitely stun investors.
Momentum: For Momentum I am using the 10 period. Momentum was unimpressed with the rally on Monday and today it turned slightly negative but again it is more neutral than either negative or positive.
MACD Histogram: 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 sell signal on March 25 just two days after a buy signal. The sell signal though remains weak on Tuesday.
Ultimate Oscillator: 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 negative but rising.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is still undecided on the direction and is pointing more sideways than up or down for stocks.
Slow Stochastic: For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic tries to predict the market direction further out than just one day. The slow stochastic is still signaling up for stocks but the signal is very weak.
Fast Stochastic: 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 pointing up for stocks but it took a big hit today and you can see in the chart that it has turned sharply lower. It could easily issue a sell signal if the S&P falls lower on Wednesday..
Market Direction Outlook for Apr 1 2015
The technical indicators are still mixed. Rate of change and momentum are neutral. The two stochastic indicators are pointing up but only weakly. The momentum, Ultimate Oscillator and MACD are pointing lower. We are therefore back to a see-saw day. After the big run-up on Monday and then the decline on Tuesday we could see a bounce at the open and then sideways with the market drifting between losses and gains for the day.
Historically the first trading day for April has seen the Dow up 16 times in the last 20 years. With April being the strongest month for stocks, don’t be surprised with some upside action on Wednesday.
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