The market direction outlook for the S&P for Friday Apr 24 was for stocks to continue a modest advance. Part of the reason for a modestly higher outlook was volume which remains below-average at best. For the markets to push a lot higher and hold those highs, volume has to improve and build. Markets can always move higher on low volume and often low volume will create periods of higher and lower moves than usually would occur. But there is always no staying power or strength to movements that have low volumes. The market direction moves this year are a good example. Since January there have been very few days of 4 billion plus trades. Instead volumes are coming in at 2.8 to 3.3 billion which are below average and while they can move the market around, they cannot hold a market advance or a decline for very long. This is why since December, markets have been stuck in a sideways pattern.
Advance Decline for Apr 24 2015
All three indexes moved higher on Friday but the NASDAQ received the majority of the attention as it set more new all-time highs wiping out the old highs from March 2000.
Volume though was once again poor at just 3.37 billion shares traded. Of that volume only 50% was to the upside and 48% was to the downside. This is part of the reason why the Rate Of Change indicator continues to have mixed signals. There is not enough volume in either direction on a repeated basis to assist the Rate Of Change in understanding which direction stocks are most likely headed.
There were just 8 new lows and 97 new highs. While the new highs fell slightly from Thursday’s 113 new highs, the new lows are what keeps signaling that at the present time, there is limited pressure to break lower for stocks. Therefore the upside momentum continues to hold the upper hand.
Market Direction Closings For Apr 24 2015
The S&P closed at 2,117.69 up 4.76. The Dow closed at 18,080.14 up 21.45. The NASDAQ closed at 5092.08 up 36.02 to another new all-time high.
Market Direction Technical Indicators At The Close of Apr 24 2015
Let’s review the market direction technical indicators at the close of Apr 24 2015 on the S&P 500 and view the market direction outlook for Apr 27 2015.
Market Direction Technical Analysis for Apr 24 2015
Stock Chart Comments:
The market rose intraday to set yet another new all-time high of 120.92. It closed off the high at 2117.69 almost matching the advance of Thursday in the S&P.
The 20 day simple moving average (SMA) is back up to the 50 day simple moving average (SMA) and ready to move above it which will signal more upside action for the S&P.
The continually pullback from intraday highs is understandable as profit-taking is ongoing as the market moves higher. However the push higher is also creating a stronger and growing overbought condition which will see the markets pullback at some point shortly.
The S&P is now back to the Upper Bollinger Band and is pushing the Upper Bollinger Band higher. Again this is a good signal that stocks will move higher.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 was very light support. 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 but moving lower.
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 on Friday.
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 is also trending higher as it reaches overbought readings.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change is now signaling higher 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 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 it too is overbought.
Market Direction Outlook for Apr 27 2015
For Monday don’t be surprised if the morning is generally weak. Volumes remain below average and stocks are getting overbought. This means the market probably has more upside but selling will continue which will work toward keeping a cap on the advance.
Technical indicators are heavily supportive of the market advancing further, even if there is some weakness. For Monday stocks are entering overbought signals which could begin to see more choppiness to the markets. I am expecting another positive close but I do think there will be weakness in the morning.
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