For Wednesday, it was expected that the second day of testimony was probably enough to push the markets slightly higher or at least not drop them. Fed Chair Yellen’s testimony again on Wednesday continued to discuss the reasons why the coming rate increase may be a while yet before happening. With her testimony out of the way, stocks will be looking for a catalyst to be able to push higher as they are sitting at all-time highs or in the case of the NASDAQ, on the verge of new all-time highs.
Advance Decline for Feb 25 2015
Volume was up only slightly again on Wednesday with 3.3 billion shares traded, up about 100 million shares from Tuesday’s trading. 53% of all volume was to the upside and 46% to the downside, however new highs were just 134 while new lows also fell back, at 17. 61% of all volume was to the upside with 38% to the downside.
Market Direction Closings For Feb 25 2015
The S&P closed at 2,113.86 down 1.62. The Dow closed at 18,224.57 up 15.38. The NASDAQ closed at 4,967.14 down 0.98.
Market Direction Technical Indicators At The Close of Feb 25 2015
Let’s review the market direction technical indicators at the close of Feb 25 2015 on the S&P 500 and view the market direction outlook for Feb 26 2015.
Market Direction Technical Analysis for Feb 25 2015
Stock Chart Comments:
The S&P drifted today as Fed Chair Yellen ended her testimony. With no catalyst to the upside and stock indexes sitting at historic highs, the market may want a breather. The closing candlestick was another doji-cross. That is the fourth such similar signal in the last 6 trading sessions. Eventually it will be correct and the S&P will pullback slightly. Yesterday I commented that the market may want to take a rest and retest the 2100 level. It would not be much of a dip if it did so.
Support and Resistance Levels:
These are the present support levels.
2100 is very light support. 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 and sideways with a slight bias 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 weak buy signal Feb 4. MACD is positive and continues to give divergence readings that stay weak.
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 up continuing to support the advance in the stock index.
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 now pointing 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 also signaling down for stocks and is very overbought.
Market Direction Outlook for Feb 26 2015
For Thursday stocks look like they may want to rest. A possible retest of the 2100 level may be in store either Thursday or Friday. The technical indicators are split with two pointing down, two pointing to weakness, one very overbought and one pointing higher, You can see the problem. Only one technical indicator is pointing up for Thursday while 2 have sell signals in place. While I would not expect much weakness on Thursday, the morning may set the tone. Overall though the direction remains up but of course, it is never straight up.
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