The market direction outlook for the S&P for Wednesday April 22 was for an attempt to rally at the open but weakness in the morning to prevail. The close could be positive or negative but overall the outlook remains weak for stocks presently.
By the close of the day stocks had recovered from earlier weakness and closed positive. Some quarterly results impressed but others disappointed on Wednesday. Facebook Stock came in soft on their numbers as did McDonalds. AT&T met estimates. Coca Cola surprised many analysts with better than expected sales and profits despite currency difficulties and the stock moved up 2% at one point before closing up 1.3%. On the other hand Qualcomm reported a whopping 46% drop in profit for the second quarter which drove shares down about 2 percent after hours. Much of the loss was the result of a huge $975 million dollar fine to Chinese authorities. The company also cut its full year revenue and profit forecast for the second time this year. Hedge Fund Jana Partners again called for the company to split into two to improve shareholder value.
Advance Decline for Apr 22 2015
Volume rose by 150 million shares to 3.35 billion on Wednesday. 69% of all volume was to the upside by the close of the day with 29% moving lower. New highs came in at 85 while new lows rose to 23.
Market Direction Closings For Apr 22 2015
The S&P closed at 2,107.96 up 10.67. The Dow closed at 18,038.77 up 88.68. The NASDAQ closed at 5035.17 up 21.07.
Market Direction Technical Indicators At The Close of Apr 22 2015
Let’s review the market direction technical indicators at the close of Apr 22 2015 on the S&P 500 and view the market direction outlook for Apr 23 2015.
SPX Market Direction Technical Analysis for Apr 23 2015
Stock Chart Comments:
The market fell below 2100 at the outset on Wednesday which once more brought in buyers who continue to use dips to reposition themselves for gains.
The market by 10:45 had regained some of its footing and spent the rest of the day moving higher. The 20 day simple moving average (SMA) continues to trade below the 50 day SMA confirming its recent sell signal.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 was very light support and is now resistance. Stocks will have to stay above it to change it back to support and convince investors that the market has staying power and will push well beyond 2100. That still does not appear to be the case.
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 pullback in January and February.
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 and bring to question whether the bull market is finished.
Momentum: For Momentum I am using the 10 period. Momentum is positive and rose slightly.
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 buy signal on Apr 9 and that signal moved higher today.
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 positive and trending more sideways than up or down.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change continues to indicate that the next move for stocks will be lower. It has now turned back slightly positive which may place the trend down in question.
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 pointing up for stocks and is overbought.
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 and confirmed its recent buy signal.
Market Direction Outlook for Apr 23 2015
The bias for Thursday is for stocks to continue to advance. How much upside there is is difficult to judge but the technical indicators in general have enough strength to see another rise in stocks on Thursday.
Caution remains warranted as stocks continue to push higher. Valuations in general are not supportive of stocks continuing to climb too much beyond possibly setting new all-time highs.
Any sign of serious trouble and selling will erupt again as investors are nervous that the market could pullback harder than they anticipate and at the same time, they worry they may miss out on a possible breakout of stocks. I plan to stay cautious even as the market moves higher on Thursday.
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