The market direction outlook for Monday was for stocks to stage a rally at the open and then sell lower. The opening on Monday saw a huge rally as the Dow and the S&P recaptured their losses from Friday. Then stocks sold lower turning negative as investors dumped shares in a variety of stocks with the emphasis still on those NASDAQ stocks that are seen by most as highly speculative. Apple stock meanwhile continue to climb on Monday and reached into highs not seen since 2012. Obviously at present anyway, the 7 to 1 stock split has been a huge hit with investors.
Then in mid-afternoon investors returns again and pushed stocks back higher returning them to positive territory but definitely off their highs. The NASDAQ however closed down just fractionally on the day. Let’s take a look at today’s action.
Market Direction S&P Intraday Chart April 28 2014
The one minute chart below for April 28 2014 below shows the volatile day. The morning opened with a rally to recover Friday’s losses only to see a reversal starting just before 11:00 AM. This trade around 11:00 AM is fast becoming highly lucrative. Almost every trading day the market pivots around 11:00 AM either up or down and the trades are exceptional. From 11:00 AM the market fell lower, turning deeply negative following to 1850.61. Then investors returned and began buying stocks again as a recovery occurred in the afternoon. Investors pushed stocks all the way back to the 11:00 AM morning high. The S&P closed just below the 11:00 AM high at $1869.43. Monday’s market action is being written off as a reaction to the continuing Ukrainian crisis. Personally I doubt that had the impact. The market is rotating out of higher risky stocks and into large cap dividend paying stocks. This is pushing up those stocks and wiping out the valuations from spec stocks, especially the NASDAQ stocks.
Advance Declines For April 28 2014
The wild action today saw 50% of stocks advancing and 46% declining. 111 stocks were making new highs and 101 new lows. You can tell that the day was split almost evenly between advancing and declining issues.
Market Direction Closings For April 28 2014
The S&P closed at 1869.43 up 6.03. The Dow closed at 16,448.74 up 87.28. The NASDAQ closed at 4074.40 down just 1.16 but once again below the 100 day EMA.
The Russell 2000 ETF IWM fell 65 cents to close at 110.96. Once again on Monday investors were back dumping their shares of small cap stocks.
Market Direction Technical Indicators At The Close of April 28 2014
Let’s review the market direction technical indicators at the close of April 25 2014 on the S&P 500 and view the market direction outlook for April 28 2014.
The 1750 level continues to hold the S&P up since the correction ended in early February. All the levels of any support above 1800 have been broken and will need time to heal and create support again. Any downturn in stocks will quickly see these levels above 1800 break. The only level above 1800 that has any support worth mentioning is the 1840 level. Today’s market gyrations saw a huge spread in the S&P as well as all the other indexes. On the S&P the market fell easily to the 1850 level because there is no support aside from light support at 1840. I am still of the opinion that sometime over the spring to summer months investors will see the market retest 1750 on the S&P.
For Momentum I am using the 10 period. Momentum has been the best indicator over the past four months, replacing MACD as the most accurate indicator. Momentum is still positive and is back climbing on Monday.
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 April 22 and on Monday MACD was still positive but the up signal is continuing to erode.
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 continuing to provide positive readings.
Rate Of Change is set for a 21 period. The rate of change is still providing a positive reading.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is signaling market direction is neutral for Tuesday.
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 continues to signal that Tuesday will see stocks move lower.
Market Direction Outlook And Strategy for April 29 2014
The technical indicators are split following Monday’s erratic day. 4 of the 6 are still positive but only momentum is actually rising, which can be a good signal for investors. Meanwhile only one is neutral and one is negative. That means the technical indicators are broadly supportive of the market direction moving higher in the short-term.
My own personal belief is that the market direction has moved to a traders’ market. All those who are traders should be enjoying decent profits and lots of trading. For Tuesday I am expecting the market direction to continue higher into the morning and then experience some weakness around 11:00 AM. I am not expecting the S&P to collapse, but to be slightly weak with a bias to the upside for Tuesday.
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