The outlook for stocks for Thursday Dec 4 2014 was for stocks to remain mixed but keep a bias to the upside. Stocks stayed mixed throughout the day on Thursday thanks to the ECB which indicated any Quantitative Easing would have to wait for 2015 which sent European stocks lower. This downturn hit stocks here and as they remain overbought, stocks had a tough time pushing still higher. As well Friday is the release of the non-farm payroll numbers for November and investors stayed on the sidelines much of the day while waiting for their release.
Advance Declines For Dec 4 2014
Volume on Thursday dropped about 200 million shares from Wednesday with 3.4 billion shares traded. Yesterday 70% of shares traded to the upside. Today 70% shares traded to the downside. There were 171 new highs and 116 new lows.
Market Direction Closings For Dec 4 2014
The S&P closed at 2071.92 down 2.41. The Dow closed at 17,900.10 down 12.52. The NASDAQ closed at 4769.44 down 5.04.
Market Direction Technical Indicators At The Close of Dec 4 2014
Let’s review the market direction technical indicators at the close of Dec 4 2014 on the S&P 500 and view the market direction outlook for Dec 5 2014.
Market Direction Technical Analysis for Dec 4 2014
Stock Chart Comments: The SPX continued to try to push the Upper Bollinger Band. The Bollinger Bands Squeeze continues to unfold and the 20 day simple moving average (SMA) continued to trend higher and supporting stocks. The 50 day SMA is trending on top of the 100 day and could cross lower but is continuing to stay narrow but has not yet crossed over the 100 day.
The support level at 2050 is light support and will not delay a fall for more than a few hours. 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 positive and falling slightly.
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.
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 remained positive today.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is moving sideways and still indicating a change in the trend is underway.
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 up and issued a buy signal today.
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 up for stocks and is also overbought but today it came close to issuing a sell signal.
Market Direction Outlook and Strategy for Dec 5 2014
Technically for Friday Dec 5, stocks should remain mixed. The technical indicators remain undecided as a group but individually there are still two pointing lower, two neutral and two pointing higher, a true mixed outlook.
Friday we get the November unemployment report and often that can change the market direction. For Friday stocks look mixed but the bias is almost neutral. Most likely the unemployment report will decide the outcome. More in-depth analysis is in the members section. I will also be updating the direction during the day tomorrow.
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