Market Direction Outlook For Aug 26 2014 – Abbreviated

The market direction outlook for Monday was for both the SPX and the TSX to continue higher. Tonight’s market direction review is abbreviated as I spent much of the evening finishing an article looking at the steps to building and protecting a portfolio. The article is over 5100 words and is 16 pages in length. It includes detailed information on stock trades which I updated after the close this evening. Unfortunately it took longer than expected so the market direction outlook will be abbreviated.

I will however be reviewing the markets intraday tomorrow.

SPX Market Direction Outlook And Strategy for August 26 2014

The S&P broke through 2000 for the first time today and then backed off. This pullback is definitely understandable and I will not be surprised to see the market close above 2000 on Tuesday and then pullback and close below it on Wednesday. While the 2000 number is merely just a number and holds no technical significance at this point, these numbers hold emotional significance for many investors. A large number of investors trade against these “big numbers” and 2000 is the biggest number in a while. For Tuesday stocks may jump at the open and then pullback but I think an afternoon rally may push the SPX back over 2000 to try to close above it.

Technically there is a lot of strength left in stocks and today’s volume was just 2.2 billion shares so pushing the market up or down is a lot easier with less volume. New highs today came in at 157 versus 20 new lows. Up Volume was 68% of all shares traded.

At this point in the rally we may start to see more sideways action develop. For Tuesday though technically only the Slow Stochastic is pointing down while a lot of the indicators are overbought. We should see investors keep pushing stocks higher on Tuesday.

TSX Market Direction Outlook And Strategy for August 26 2014

The TSX for Monday showed some signs of weakness but the bias remained up and the index obliged with another new all-time high. All the indicators continue to be overbought. The Slow Stochastic turned slightly negative on Monday after the close so we could see more weakness on Tuesday. A lot depends on the US markets. If they move lower on Tuesday Toronto will probably take a breather and move lower. I am not expecting anything in the way of a major move down. Just a few points would be the most I would expect. However there is still a lot of strength in stocks and with more bank earnings on Tuesday we could see stocks actually get an additional lift.

For Tuesday then I think Toronto will try to keep the momentum moving to the upside even if it is only a slightly higher close.

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