For Thursday a rest was expected. While the outlook was for the S&P to seek to retest the 2100 level before moving higher, we might have seen that retest near the end of the day when the S&P broke through 2106, fell to 2103.76 at 3:00 PM. That brought in a raft of buyers who quickly moved the S&P up to close at 2110.74, down just 3.13 points on the day. Meanwhile the NASDAQ continued to push higher moving up 20.75 points and on the very steps of 5000, a valuation thought unthinkable after the Tech Bubble burst. Articles at that time predicted the NASDAQ would take 30 to 40 years to recover.
Advance Decline for Feb 26 2015
Volume was poor until almost 3:00 PM when the large dip brought in a wave of buyers who saw the dip as a chance to get into the next “leg -up” in the market. Volume shot to 3.4 billion shares, up a billion shares in the last hour of trading alone. Up volume was just 34% and down volume 64% but new lows rose to just 22. New highs came in at 122 but it is the new lows that advises that today was nothing more than a dip and a short rest.The market direction continues to point higher according to the Advance Decline numbers.
Market Direction Closings For Feb 26 2015
The S&P closed at 2,110.74 down 3.12. The Dow closed at 18,214.42 down 10.15. The NASDAQ closed at 4,987.89 up 20.75.
Market Direction Technical Indicators At The Close of Feb 26 2015
Let’s review the market direction technical indicators at the close of Feb 26 2015 on the S&P 500 and view the market direction outlook for Feb 27 2015.
Market Direction Technical Analysis for Feb 26 2015
Stock Chart Comments:
The S&P faced a bit more resistance today and after reaching new heights rested. The lack of volume through much of the day resulted in the S&P testing 2106 in the morning and then again in the later afternoon, only to lose its grip and fall lower reaching 2103.76. That brought in more than a billion shares in the last hour of trading which turned the S&P right around. Wednesday the S&P faced a doji-cross candlestick which quite often results in weakness the following day or two so we may have seen the weakness today which that candlestick had signaled. The major moving averages remain in great shape and continue to point higher for stocks. The Upper Bollinger Band is starting to turn sideways which could be a signal that the up move will rest longer than just today.
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 and continues 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 but it continues to drop in strength. Still at a reading of 3.57 it is positive and could easily rally from here.
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 27 2015
For Friday, the final trading day of February, there are two indexes that continue to point to lower prices in the S&P, namely both stochastic indicators. This is their second day of warnings to the downside. However the other indicators continue to stay positive and indeed the Rate Of Change is indicating the rally has more room to run. That makes the technical outlook 4 to 2 for the advance to continue shortly.
For Friday morning we could see a bounce right at the open and then more selling early morning. The outlook though still looks like the market has enough strength to stay above 2100 and close positive on Friday. Today’s activity did nothing to question the upward bias to the market direction. So while weakness might be expected in the mid-morning on Friday, the outlook is still up for the final trading day of February 2015.
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