Bank and Technology shares led the way higher in the afternoon on Thursday. Even in the morning while the market dithered over whether to rise or fall, bank stocks and tech stocks were stronger. Eventually another tale of yet another meeting of Russia, Venezuela, Saudi Arabia and Qatar was still enough to move oil higher in the afternoon and that finally pushed investors to move the index to its highest close since Jan 6 and wiping out the February decline.
Index Closing Prices
The indexes closed at their highs. The S&P closed at 1,951.70 up 21.90. The Dow Jones closed at 16,697.29 up 212.30. The NASDAQ closed at 4,582.21 up 39.60.
Advance Decline Numbers
Volume fell to 4.1 billion today. By the close 71% of all trades were moving higher and 72% of all stocks on New York were rising. There were 90 new highs and 40 new lows. This is the highest number of new highs since the start of January.
The NASDAQ saw 1.67 billion shares traded which is light. 71% of all volume was being traded to the upside. There were 51 new lows and just 29 new highs.
Market Direction Technical Indicators At The Close
SPX Market Direction Technical Analysis for Feb 25 2016
Stock Chart Comments:
The S&P closed above the 50 day simple moving average (SMA) for the first time since Dec 29. The Upper Bollinger Band is ready to cross up and over the 100 day moving average which is an up signal for the market. The 20 day moving average is already turning up. The 200 and 100 day moving averages are still leading the market. Today’s close wiped out all of February’s decline in the S&P.
The closing candlestick is somewhat bearish for the following day.
Support and Resistance Levels:
These are the present support and resistance levels. These levels have not changed since January 2015.
2100 is resistance.
2075 was light support and is also resistance. Below that is 2050 which is also resistance.
Stronger support was at 2000 which is now resistance.
Weak resistance is at 1970 while stronger resistance is at 1956 and technically it is more important than 1970 for the market. 1940 is light support as is 1920. 1900 is more symbolic than anything else.
1870 is support. 1840 continues to be support. The 1820 level is light support. The strongest support level is at 1800.
1775 and 1750 are both 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 all-time high of 2134.72. This would be the biggest correction since the plunge in 2011 of a 20% pullback. A pullback to 1750 from the all-time high would be a drop of 384 points for a decline of 18%. A pull-back of that size would definitely stun investors and bring to question whether the bull market which started in 2009 is finished. From 1750 it is an easy slide to 1600 which was near the market top in 2007.
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive is rising sharply.
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 buy signal Feb 16 which is back 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 positive and rising back to an overbought signal.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive but moving sideways signaling no real change in direction is expected.
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 pointing up for stocks. It is overbought and could change to a down signal with a negative close on Friday.
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 pointing up for stocks. It is overbought.
Market Direction Outlook for Feb 26 2016
With news this evening of China’s Central Bank providing further liquidity to the markets and pushing interest rates lower, this should assist the market in recovering.
As well, the orders for Capital Goods were the highest since June 2014 which surprised analysts. The Weekly Initial Unemployment Insurance Claims were also in line with expectations and continues to point to the labor market tightening, an indication of the economy continuing to grow. This assisted stocks in climbing on Thursday and should assist on Friday as well.
The connection with oil remains steadfast however and any move lower in oil’s price, especially below $30.00 would be damaging to the rally.
The technical indicators are all positive for the market.
The outlook for Friday is for stocks to continue the advance and move still higher although selling will be commonplace as the market moves higher which should slow the advance.
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