For Monday, stocks ended the day virtually unchanged on the day as investor wait for Fed Chair Yellen to speak on Tuesday. Any hint of a possible interest rate rise by this spring will push markets lower. Personally I don’t think we will see any change in interest rates this spring. Crude oil fell again on Monday closing back below $50.00 a barrel at $49.45. The US dollar moved up slightly against many currencies including the Canadian dollar.
Advance Decline for Feb 23 2015
Volume was lower on Monday with just shy of 3.1 billion shares traded. Despite the market closing virtually unchanged, down volume made up 64% of all trades while up volume was 35%. Meanwhile new lows moved up only slightly to 22 while new highs only fell back by a handful to 157.
Despite volume to the downside, most stocks held their ground on Monday ahead of the Fed report on Tuesday and Wednesday.
Market Direction Closings For Feb 23 2015
The S&P closed at 2,109.66 down 0.64. The Dow closed at 18,116.84 down 23.60. The NASDAQ closed at 4,960.97 up 5.01.
Market Direction Technical Indicators At The Close of Feb 23 2015
Let’s review the market direction technical indicators at the close of Feb 23 2015 on the S&P 500 and view the market direction outlook for Feb 24 2015.
Market Direction Technical Analysis for Feb 23 2015
Stock Chart Comments:
Nothing new to report on Monday with the market basically unchanged on the day. However the candlesticks are showing the indecision among investors. Twice over the past 4 trading days we have seen spinning tops and one doji-cross. These candlesticks continue to point to weakness in the rally as indecision among investors keeps the market in a tight trading range.
The S&P push as you can see in the chart looks still 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 to 2075. At that point I would expect the market to stop for a short period before continuing lower. The SPX is far above the major moving averages, which again is indicative of the market moving higher still. It is also indicative of the market rally stalling while the moving averages move higher.
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 and almost unchanged from Friday.
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 24 2015
Ahead of the Fed the market is sitting still as investors wait to see what, if anything new there is from Chair Yellen. At this point any news of an increase in rates coming by this spring, will send stocks lower.
If there is no talk about interest rates and no surprises, the market will push higher.
Technically there is no real change in the indicators from Friday’s close. They are all pointing to weakness in the rally but for stocks to continue to push higher. On Tuesday is comes down to the Fed comments.
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