Friday’s outlook for the SPX was for the decline to continue. Basically, the bounce on Thursday was simply a bounce according to the technical indicators at the end of Thursday’s trading. For Friday then a further decline was anticipated. In the end the SPX collapsed 1.62% back to the 2000 level, closing at the low of the day. The Dow fell over 300 points for a 1.79% decline and the NASDAQ fell 54 points for a decline of 1.16%, the lowest among the three major indexes.
Advance Declines For Dec 12 2014
Friday ended up one of the heavier days for volume in weeks with 4.2 billion shares traded and 82% of all volume to the downside. There were 360 new lows and just 52 new highs. Friday was definitely won by the bears. The number of new lows is swamping the bulls and declining issues were at 78% on Friday.
Market Direction Closings For Dec 12 2014
The S&P closed at 2002.33 down 33.00. The Dow closed at 17,280.83 down 315.51. The NASDAQ closed at 4653.60 down 54.57.
Market Direction Technical Indicators At The Close of Dec 12 2014
Let’s review the market direction technical indicators at the close of Dec 12 2014 on the S&P 500 and view the market direction outlook for Dec 15 2014.
Market Direction Technical Analysis for Dec 12 2014
Stock Chart Comments: The Bollinger Bands Squeeze has ended as stocks headed lower on Friday. Meanwhile stocks closed right at the 50 day moving average on Friday. Interestingly, the 50 day simple moving average (SMA) appears to be trying to push away from the 100 day and move higher. Meanwhile the Middle Bollinger Band is turning lower along with the market trend. The SPX is now at the 2000 support level.
2000 is the highest level of decent support at present and while not strong, it should have enough strength to hold sellers back for at least a day in the event of an interim pullback. If 2050 should break, stocks will collapse back to 2000 in very quick order. The next level after 2000 is at 1970 and then 1956.
Strong Support Levels are at 1870 and 1840. Both levels are strong enough to delay the market falling.
The other two support levels not shown in the chart above 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 now the bottom line.
A break of 1750 would mark a severe correction of more than 13% from the most recent high. This would be the biggest correction since April 2012. A pull-back of that size would definitely stun investors at this point and it is not something I am anticipating at this time.
Momentum: For Momentum I am using the 10 period. 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 Dec 1. MACD continues negative and is building more strength to the downside.
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 deeply oversold.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is moving lower and into negative readings. It continues to suggest that stocks will fall still lower before any serious uptrend occurs.
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 market direction is down and it is deeply oversold..
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 signaling a very strong down day for Monday and it also deeply oversold.
Market Direction Outlook and Strategy for Dec 15 2014
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