The outlook for Friday was for stocks to have a 50% chance of moving higher. But if they did not move higher on Friday, they would on Monday. Instead stocks were steady in the morning and then moved higher into the close to set another new closing high for the S&P. The strength of the market is obvious and the outlook remains reasonably bullish.
Advance Decline for Feb 20 2015
Volume was almost unchanged from Thursday with 3.3 billion shares traded. Only 32% of all volume was trading to the downside and 67% to the upside. There were though only 14 new lows and 164 new highs. The number of new highs is not indicative of a “run-away” move to the upside but with the new lows, so few, the trend up remains obvious..
Market Direction Closings For Feb 20 2015
The S&P closed at 2,110.30 up 12.85. The Dow closed at 18,140.44 up 154.67. The NASDAQ closed at 4,955.97 up 31.27.
Market Direction Technical Indicators At The Close of Feb 20 2015
Let’s review the market direction technical indicators at the close of Feb 20 2015 on the S&P 500 and view the market direction outlook for Feb 23 2015.
Market Direction Technical Analysis for Feb 20 2015
Stock Chart Comments:
The S&P push as you can see in the chart looks ready to break out higher. There is some light support developing at around 2100 but it is very light at the present time. Any selling lower would easily fall through. A break of 2100 at this point would mean buying put options for a short couple of days of movement lower. The SPX is far above the major moving averages, which again is indicative of the market moving higher still.
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 is positive on Friday and still supporting the move higher.
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 very overbought.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is turned sideways indicating weakness in the trend up.
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 is neutral on its direction 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 also neutral on the direction of stocks and very overbought.
Market Direction Outlook for Feb 23 2015
Technically the move higher on Friday did not show up in stronger up signals from any of the indicators. I had expected a sideways day on Friday and then a move higher on Monday. While there is little chance of any kind of major pullback now, we could see a jump at the open on Monday and then a weak morning. A further move higher into the close is probably in the cards for Monday but we need to see the indicators give stronger support to the rally. Instead they are pointing to continued lack of conviction on the part of investors.
So for Monday, stocks are overbought but in general we should see a higher close.
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