Tonight’s title sounds like that movies “Back To The Future” with its ominous phrase “1970 Coming Soon”, but that is what the market looks ready to do. The 1970 level is back to the 200 day moving average and with investors somewhat soured on the market at present and the bond market continuing to rise, investors are getting out of stocks. The S&P though is down just 4.8% from the highs of late December so this is still just a pullback and not much more. That could be changing.
Advance Decline for Jan 15 2015
Volume was still high on Thursday with 4.3 billion shares traded. Yesterday almost 70% of all the volume was to the downside and today it was the same. There were 173 new highs though which is a jump from yesterday’s 111 and new lows fell way back from yesterday’s 220 to almost half that number at 120. Still though the day belonged to the bears again.
Market Direction Closings For Jan 15 2015
The S&P closed at 1992.67 down 18.60. The Dow closed at 17,320.71 down 106.38. The NASDAQ closed at 4,570.82 down 68.50..
Market Direction Technical Indicators At The Close of Jan 15 2015
Let’s review the market direction technical indicators at the close of Jan 15 2015 on the S&P 500 and view the market direction outlook for Jan 16 2015.
Market Direction Technical Analysis for Jan 15 2015
Stock Chart Comments:
The S&P finally broke through the 2000 level and closed below it. This places the S&P below the 100 day moving average. Meanwhile the 20 day simple moving average (SMA) has actually turned up slightly moving higher. This is being caused though by the Lower Bollinger Band moving higher as we can see the possible beginning of a Bollinger Bands Squeeze forming. The 1970 to 1975 level is in plain sight of the market now and this will place the S&P to the 200 day moving average.
Support Levels:
These are the present support levels.
2075 was light support. Below that was 2050 which was also light support. Stronger support is at 2000 which did today delay a fall for a while. Weak support is down at 1970. Stronger support is then at 1956 which should delay a further pullback by at least a day.
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 this time.
Momentum: For Momentum I am using the 10 period. Momentum is negative.
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 sell signal on Jan 5. MACD continues to be negative and readings to the downside are 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 negative and moving lower nearing oversold.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is now trending sideways, having given up the outlook for a move back up. Instead it is indicating there is no change in market direction coming for Friday. That means lower for stocks.
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 signaling market direction is down. It is oversold.
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 signaling down for stocks as well. It too is oversold.
Market Direction Outlook and Strategy for Jan 16 2015
I had expected a better bounce today. Stocks should have been able to mount a stronger rally. Once that didn’t happen stocks simply drifted lower but on volume of 4.3 billion shares. Technically the market remains weak which means for Friday stocks are set to continue to move lower. The 1970 to 1975 level in the S&P would appear to be the next stop.
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