How quickly events can change investors and the markets. The devaluation of the Yuan impacted stocks globally and indexes tumbled. Some stocks are more exposed than others to China’s woes including Apple which dropped 5.2% today, Yum Stock down 4.87%, Caterpillar Stock down 2.64% and Alibaba down 3.89% to mention just 4.
Advance Decline Numbers for Aug 11 2015
Volume by the end of the day was 3.7 billion, up just 200 million shares from Monday. 153 stocks made new lows and 37 new highs but 71% of all trades were lower and 61% of all stocks were falling.
Market Direction Closings For Aug 11 2015
The S&P closed at 2,084.07 down 20.11. The Dow closed at 17,402.84 down 212.33. The NASDAQ closed at 5036.79 down 65.01.
Market Direction Technical Indicators At The Close of Aug 11 2015
Let’s review the market direction technical indicators at the close of Aug 11 2015 on the S&P 500 and view the market direction outlook for Aug 12 2015.
Market Direction Technical Analysis for Aug 11 2015
Stock Chart Comments:
Selling was steady all day although the index closed above the day’s lows. At 2084 the S&P is still above the important 2075 support and indeed bounced higher when the index reached 2076.49 which indicates that support is still managing to hold onto the 2075 level. The 20 day moving average however is turning back down and the 50 day simple moving average (SMA) is moving lower as well. The index itself closed back below the 100 day moving average which is negative for stocks.
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 and falling.
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 increasing.
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 but falling rapidly and ready to turn negative.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is now negative and signaling lower 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 still 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 down for stocks and issued a strong sell signal.
Market Direction Outlook for August 12 2015
The outlook has once more changed. The technical indicators are turning bearish with just two hanging onto positive signals but ready to turn negative and the other 4 pointing lower by the close. The Fast Stochastic issued a strong sell signal at the close today. For Wednesday stocks may attempt to rally in the morning but the outlook is negative for the close. With the present currency devaluation from China, the ramifications of which have yet to be fully felt, a cautious outlook is a good choice at present.
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