Monday’s market was expected to move higher but certainly not by the percentages seen by the close. The market bounced as technically it was oversold and due for a bounce as well as comments by Federal Reserve Vice Chairman Stanley Fischer that September will probably see no rate hike and he doubted a rate hike would come until the Fed sees its inflation target of 2% reached which embolden investors to risk capital. Last was the boost from Warren Buffett who spent about $32 billion to acquire Precision Castparts Corp (PCP). All of this sent investors into a buying mood.
Advance Decline Numbers for Aug 10 2015
Volume by the end of the day was 3.5 billion with more than a billion shares traded in the last hour. 88% of all trades were to the upside and 73% of all stocks on New York were advancing. There were 81 new lows and 83 new highs.
Market Direction Closings For Aug 10 2015
The S&P closed at 2,104.18 up 26.61. The Dow closed at 17,615.17 up 241.79. The NASDAQ closed at 5101.80 up 58.25.
Market Direction Technical Indicators At The Close of Aug 10 2015
Let’s review the market direction technical indicators at the close of Aug 10 2015 on the S&P 500 and view the market direction outlook for Aug 11 2015.
Market Direction Technical Analysis for Aug 10 2015
Stock Chart Comments:
From the outset investors were buying and by the close the S&P was just off the highs for the day. The Index closed on Monday back above the 50 day moving average and the 20 day was well above the 50 day moving average. The index has now recovereed the 2100 level once again.
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 positive and 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 which today was weakening.
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 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 up 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 pointing to up for stocks.
Market Direction Outlook for August 11 2015
After such a huge rally a pullback in the morning should be expected however by the close the index should be higher for the day.
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