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Market Direction Outlook For Feb 18 2015 – Overbought, Sideways, Lower Close

Feb 17, 2015 | Stock Market Outlook

The outlook for Tuesday following the 3 day long weekend, was for stocks to remain overbought, dip but close higher.  This is what happened and indeed the S&P set another new closing and intraday high today.

Advance Decline for Feb 17 2015

Volume was down slightly from Friday with 3.4 billion shares traded. Only 144 new highs were recorded by the close and just 17 new lows. The new highs though is not in keeping with a strong bull market pushing into virgin territory. The numbers are down from Friday as well. Just 56% of issues were to the upside while 42% were to the downside.

Market Direction Closings For Feb 17 2015

The S&P closed at 2,100.34 up 3.35 The Dow closed at 18,047.58 up 28.23. The NASDAQ closed at 4,899.27 up 5.43.

Market Direction Technical Indicators At The Close of Feb 17 2015

Let’s review the market direction technical indicators at the close of Feb 17 2015 on the S&P 500 and view the market direction outlook for Feb 18 2015.

Market Direction Technical Analysis for Feb 17 2015

Market Direction Technical Analysis for Feb 17 2015

Stock Chart Comments:

The S&P pushed still higher but only slightly and against heavier selling. Still though the push higher resulted in new all-time highs and did not collapse into the close. The doji-cross candlestick from last week has just one day left which is Wednesday to impact stocks. Personally I think it will impact stocks on Wednesday.

All major support levels are moving higher and the 20 day simple moving average (SMA) is now above the 50 day simple moving average (SMA) indicating higher prices are ahead.

Support and Resistance Levels:

These are the present support levels.

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 recent pullback.

Weak support is at 1970. Stronger support is then 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 at this point and it is not something I am anticipating at present.

Momentum: For Momentum I am using the 10 period. Momentum is positive but has stalled.

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 weak buy signal Feb 4. MACD continued higher 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 positive and overbought.

Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is turned back down but the trend up is still being supported.

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 still overbought and but continues to have a weak up signal in place.

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 has a weak up signal also in place and is very overbought.

Market Direction Outlook for Feb 18 2015

Technically I do not see much to be worried about for Wednesday. However between the doji-cross candlestick from last week and the overbought indicators, I won’t be surprised for stocks to have another tough day ahead of them on Wednesday to be able to push higher. The two stochastic indicators are both deeply overbought and the readings are almost reading to issue sell signals.

Wednesday looks set to turn sideways and while the bias is still higher, the market looks like Wednesday will end with a lower close.

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