Today’s outlook was for stocks to try to bounce again but still head lower. Once more there was very little bounce to start the day. Instead, selling in Apple Stock seemed to dominate investors thinking and selling continued in the stock. As is almost always the case, selling brings more selling and as the day wore on selling grew by mid-afternoon. Into the close, as we have seen often this year, selling pulled back a bit and buyers managed to close the SPX off the lows for the day and down just 4.72 points to 2093.32. This was actually lower than I thought the SPX would end up at after reviewing the afternoon intraday chart. I felt there was a good chance the SPX might try to close just below 2100.
Meanwhile Apple closed down 3.21% at $114.64 although during the day it got down to $113.25.
Advance Decline Numbers for Aug 4 2015
Volume was unchanged on Tuesday at 3.5 billion shares traded but new lows moved up slightly to 176. New highs however also moved higher at 95. Volume was biased to the downside with 53% of all trades moving lower but 45% of all stocks were advancing on Tuesday so while it was a bearish day, there is still an undercurrent of strength to stocks.
Market Direction Closings For Aug 4 2015
The S&P closed at 2,093.32 down 4.72. The Dow closed at 17,550.69 down 47.51. The NASDAQ closed at 5,1105.55 down 9.84.
Market Direction Technical Indicators At The Close of Aug 4 2015
Let’s review the market direction technical indicators at the close of Aug 4 2015 on the S&P 500 and view the market direction outlook for Aug 5 2015.
Market Direction Technical Analysis for Aug 4 2015
Stock Chart Comments:
The SPX did not fall as low as they did on Monday but they also did not recover as much lost value either. The 20 day moving average is now up to the 50 day moving average but is not signaling a move higher. Today the index fell back below the 100 day moving average before it recovered. It did however close below the 50 day moving average. Often this drop can trigger some early sell programs for the following morning. That needs to be watched.
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.
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 today which is unconfirmed.
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 still positive but is now falling.
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.
Market Direction Outlook for August 5 2015
I had expected a bounce on Tuesday. That may happen on Wednesday now as the move lower on Tuesday was not by much which could signal a bounce in progress. Any bounce though will be suspect as investors remain worried about China, a possible slowing economy at home and the Fed rate hike which is expected in September. These are large obstacles to the SPX moving higher at present.
Stay FullyInformed With Email Updates
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)