Stocks on Thursday moved lower thanks to concerns over media companies sparked by Disney’s latest results and nervousness over the upcoming jobs report for July which is released on Friday at 8:30. With just a month left before interest rates are expected to rise for the first time since 2008, investors remains anxious and it showed again today with stocks declining. In particular the NASDAQ index which had been leading markets higher fell 1.62% to close within 56 points of the 5000 level.
Advance Decline Numbers for Aug 6 2015
Volume almost reached 4.3 billion shares traded on Thursday. 52% of all volume was moving to the downside but the real story is in the new lows which today jumped to 322 while new highs fell back to 50. Volume continues to point to further weakness for stocks.
Market Direction Closings For Aug 6 2015
The S&P closed at 2083.56 down 16.28. The Dow closed at 17,419.75 down 120.72. The NASDAQ closed at 5,056.44 down 83.50..
Market Direction Technical Indicators At The Close of Aug 6 2015
Let’s review the market direction technical indicators at the close of Aug 6 2015 on the S&P 500 and view the market direction outlook for Aug 7 2015.
Market Direction Technical Analysis for Aug 6 2015
Stock Chart Comments:
The SPX fell back to the 2075 support level and bounced. The close saw the S&P back above the 2075 level to 2083.56. However while the 20 day simple moving average (SMA) continues to rise above the 50 day, the 50 day moving average is still falling toward the 100 day and could cross as early as next week unless the market moves higher. The S&P closed below the 100 day moving average today.
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 ton August 4 which was confirmed today.
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 and still falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and surprisingly it moved higher today which would seem to contradict the other technical indicators. We will have to see what this indicator shows tomorrow before deciding what today’s reading means.
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 7 2015
It is all about the jobs numbers on Friday. Strong job growth will probably mean the Fed will act next month. A weak number means the economy is worse than many believe but still may not be enough to delay an interest rate hike.
Technically the indicators are becoming more bearish and the chart pattern is looking poorer for the S&P. Overall Friday looks like stock will be lower or certainly end flat.
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