The outlook for Tuesday Dec 8 was for stocks to try to rally in the morning and then sell lower. Instead, stocks sold from the open as oil continued its move lower. A small recovery by 11:00 AM set the market up for a sideways pattern which basically ended the day pretty well sideways at 2063.59 for a loss of 0.65%. The strongest close though came from the NASDAQ which fell to 5045.73 during the day but recovered to close down just 3.57 points at 5098.24. This could be the signal that the selling will stall on Wednesday and we will see the bounce I had expected on Tuesday.
Index Closing Prices
All the indexes again closed above their intraday lows. The S&P closed at 2,063.59 down 13.48. The Dow Jones closed at 17,568.00 down 162.51. The NASDAQ closed at 5098.24 down 3.57.
Advance Decline Numbers
Despite the bounce off their Lowes stocks did not fare well on Tuesday. Total volume was 4.1 billion shares. 71% of that volume was moving lower and 65% of all stocks were falling.
New lows rose from 313 on Monday to 327 on Tuesday. New highs declined from 40 to just 23 on Tuesday. As noted in prior market direction articles, with new lows showing this kind of strength there is no way a rally higher can last. Until the new lows drop off and new highs outpace new lows, every rally will have trouble and every bounce will be just that, a bounce.
Market Direction Technical Indicators At The Close
SPX Market Direction Technical Analysis for Dec 8 2015
Stock Chart Comments:
Yesterday the market plunged but today was more a sideways day, albeit still negative. The S&P closed below the Middle Bollinger Band which signals weakness, however the 50 day moving average has now pushed through the 200 day and is at the 100 day and ready to move above it. When it does that will produce a major buy signal for the market.
The S&P closed below the 2075 and 2070 light support levels.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 was light support. Stocks have been unable to stay above this level and push higher on numerous occasions. It remains resistance.
2075 is light support. Below that is 2050 which is light support. Stronger support is at 2000 which had repeatedly held the market up throughout each pullback in January and February but failed under the waves of selling in the last correction. Stocks continue to have trouble holding the 2000 level.
Weak support is at 1970 while stronger support is at 1956 and technically it is more important than 1970 for the market. 1940 is light support. 1920 is now light support. 1900 is more symbolic than anything else.
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. So far 1870 has held the market up better than any of the other support levels aside from 2000 which held the market up for months before the collapse in August.
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 of 384.72 points or 18% from the all-time high of 2134.72. 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: For momentum I use a 10 period when studying market direction. Momentum is negative and now moving lower.
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 Friday Nov 10. The sell signal is gaining strength..
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 falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative and moving lower.
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 signaling down for Wednesday.
Market Direction Outlook for Dec 9 2015
I had expected some kind of bounce on Tuesday but while that did not happen, the NASDAQ today staged a strong comeback which could be pointing to a rally of some sort happening on Wednesday.
The market is not oversold so any rally while technical in nature could also have some fundamental reasons for bouncing if we see it on Wednesday. If we don’t see a rally, stocks should move to 2050 and retest for support.
The technical indicators are all negative which means that the anticipated bounce on Wednesday will not hold.
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)
Market Direction External Links
IWM ETF Russell 2000 Fund Info
Market Direction SPY ETF 500 Fund Info