Friday was all about the jobs numbers. With the numbers continuing to show employment growth of above 200,000 for another month investors feared this would add more ammunition to the Fed’s arsenal to raise interest rates. While the estimates had pegged the jobs numbers to be in the vicinity of 225,000 for July, the non-farm payroll number still came in at 215,000 which kept the unemployment rate at 5.3% which remains the lowest rate in 7 years. The non-participating rate also continued to decline which showed that more people are finding jobs who have not been looking for employment in years.
This was enough to pressure investors to once again take profits.
Advance Decline Numbers for Aug 7 2015
Volume was 3.6 billion shares traded on Friday with new lows at 187 and new highs just 29. The new lows though is a drop back and shows that some investors were taking advantage of Friday’s selling to pick up some stocks at lower prices.
On New York 57% of stocks were declining and 40% of all stocks were advancing. Down volume swamped up volume with 67% of all trades moving to the downside. There were no signs of panic.
Market Direction Closings For Aug 7 2015
The S&P closed at 2,077.57 down 5.99 but still above the important 2075 support level. The Dow closed at 17,373.38 down 46.37 but well off the day’s lows. The NASDAQ closed at 5043.54 down just 12 points and still holding the 5000 level.
Market Direction Technical Indicators At The Close of Aug 7 2015
Let’s review the market direction technical indicators at the close of Aug 7 2015 on the S&P 500 and view the market direction outlook for Aug 10 2015.
Stock Chart Comments:
During the day the S&P fell through the important 2075 technical support level to almost touch the 200 day moving average. That brought in buyers who in the last half hour pushed the index back above the 2075 level. The NASDAQ did particularly well after two days of bigger drops as investors seemed to think that many tech stocks had reach reasonable prices and they were buying. The 20 day is continuing to move above the 50 day moving average and the 50 day moving average has still given no signals that it will fall below the 100 day moving average.
Support and Resistance Levels:
These are the present support and resistance levels and there are still no changes.
2100 is light support. Stocks will have to stay above it to change it back to solid 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: Momentum is negative but rising.
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 August 4 that was still growing to the downside 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 negative but rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is still positive but continues sideways which points to a neutral outlook on the market or basically a market that lacks direction.
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 signaling down for stocks.
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 continuing to point down for stocks and is starting to reach oversold readings but still has room to fall further..
Market Direction Outlook for August 10 2015
Friday saw the S&P tumble to almost reach the 200 day moving average. This brought in buyers who have been sitting outside the tumbling markets since the latest top was put in place on July 31. This could be an attempt on their part to simply run stocks somewhat higher for more gains or it could be the start of another rally. While I doubt this is the start of a longer rally than the prior rallies we have seen this year, Monday should see stocks try to move higher, even if only marginally.
The market direction indicators are somewhat mixed although most are fairly negative on the stock market direction. Monday then look for stocks to open higher, and move higher in the morning, then enter a period of weakness in the afternoon but still stocks could try to close slightly higher on Monday.
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