The Market Direction Outlook for Monday Apr 7 was fairly cautious with a bias to the downside. The opening for the day sent stocks spiraling lower as investors reacted negatively to the jobs numbers from Friday which were the poorest job growth since December 2013. Analysts though were quick to talk up the fact that they saw these numbers as another reason the Fed will delay raising rates early. This became the outlook within minutes of the collapse and investors snapped up stocks quickly after the pullback.
That though seemed to end by 10:30 and the market basically drifted sideways and closed at 2080 which was the morning high around 10:30. The US dollar weakened on the Friday jobs numbers which pushed oil up along with most other commodities.
Advance Decline for Apr 6 2015
Volume on Monday rose slightly to 3.3 billion shares. 76% of all trades were to the upside and new highs rose to 132 while new lows fell to 11. The day belonged to the bulls despite the fact that most of the trading was in the morning and the afternoon saw lighter volumes.
Market Direction Closings For Apr 6 2015
The S&P closed at 2,080.62 up 13.66. The Dow closed at 17,880.85 up 117.61. The NASDAQ closed at 4,917.32 up 30.38. All indexes closed off their highs.
Market Direction Technical Indicators At The Close of Apr 6 2015
Let’s review the market direction technical indicators at the close of Apr 6 2015 on the S&P 500 and view the market direction outlook for Apr 7 2015.
Market Direction Technical Analysis for Apr 6 2015
Stock Chart Comments:
Monday marked the first follow through day in a while for stocks. Friday had seen stocks move higher and despite the plunge at the open today, stocks moved higher within minutes and retook the 2075 support level. This closed the S&P back above the 50 day simple moving average (SMA), but it did not alter the 20 day SMA which is continuing to move lower. Today’s action though did turn the Upper Bollinger Band sideways and stopped the move lower for the Upper Bollinger Band.
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 is negative and despite the climb higher it turned sideways.
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. The sell signal was still weak on Monday.
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 back positive but is not climbing..
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is back positive and could be about to signal a change in trend to the upside..
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 neutral despite the move up today.
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 issued another up signal today and confirmed Friday’s weak buy signal.
Market Direction Outlook for Apr 7 2015
The technical indicators are continuing to stay mixed. It is disappointing to see the momentum indicator stay negative and instead of rising with the move higher for stocks, it turned sideways. MACD is also fairly stubborn, refusing to turn positive and clinging to negative readings. However the other four indicators are positive.
Stocks have a chance now to finally push higher after retaking the 2075 level. The problem is two indicators continue to point lower despite the move up and that keeps the rally so far, suspect. For Tuesday the outlook has to be to the upside for stocks, but in general investors should keep an eye on the momentum and MACD readings. If they refuse to move up on Tuesday stocks could be set to pullback a bit on Tuesday ahead of Alcoa’s earnings release on Wednesday. So the outlook is still cautious for Tuesday but the bias has changed to up.
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