Oil moved higher on Thursday as rumors circulated of a “deal” to reduce the glut of global oil. At one point oil was above $35 a barrel until OPEC announced that they were unaware of any talks or any “deal”. By the close of the day oil was up 2.9 percent to $33.22. Analysts claim a lot of the rally is short covering and most are warning investors to not get “sucked” into the rally in oil which they believe will end shortly.
Index Closing Prices
All the indexes closed off their highs. The S&P closed at 1,893.36 up 10.41. During the day it was above 1900. The Dow Jones closed at 16,069.64 up 125.18. The NASDAQ closed at 4,506.68 up 38.51 recovering a little over a third of Wednesday’s decline.
Advance Decline Numbers
Volume on Thursday was almost unchanged at 4.7 billion with 45% of all volume moving lower and 53% higher. New lows are creeping up on Thursday with 110 new lows which is double the new lows on Wednesday. New highs were up again, to 31.
These numbers show the first increase in new lows this week. Anywhere above 100 for new lows and the market will have trouble rallying substantially.
Market Direction Technical Indicators At The Close
SPX Market Direction Technical Analysis for Jan 28 2016
Stock Chart Comments:
Stocks closed off their highs today as the rally in oil pulled back from above $35.00 a barrel to close up 2.9 percent. Looking at the chart you can see that the S&P is continuing to trade sideways rather than up or down. The 50 day simple moving average (SMA) is now moving across the 100 day. The 200 day is leading the market. The 20 day continues to fall and the Bollinger Bands are starting to show signs of a possible Bollinger Bands Squeeze coming up.
Support and Resistance Levels:
These are the present support and resistance levels. These levels have not changed since January 2015. 2100 was light support. Stocks have been unable to stay above this level. It remains resistance.
2075 was light support and is also resistance. Below that is 2050 which was also light support and now 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 was light support and is now resistance. 1920 was light support and is also resistance. 1900 is more symbolic than anything else.
1870 and 1840 are still trying to support the markets but sellers will easily be able to overcome these technical support levels should selling erupt again. 1820 is light support.
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 2011 plunge of 271 points for 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 is finished.
Momentum: For momentum I use a 10 period when studying market direction. Momentum has risen from negative to neutral. A move up on Friday will create a positive signal.
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 4. Today, Jan 28 it issued a weak buy signal.
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.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative and moving sideways. The reading at the close was negative 7.93 which is very oversold and usually is followed by a bounce.
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 up for 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 slightly positive but more neutral than positive for Friday.
Market Direction Outlook for Jan 29 2016
Technically the S&P has three up signals although MACD is not yet confirmed. There are two neutral signals, a result of the market trending sideways for the past 5 trading days and 1 negative signal which is the Rate Of Change. It’s signal is at the point where normally a bounce commences.
The market failed to recover the loss from Wednesday but still managed a positive close of some merit. The closing candlestick can swing either way but normally it signals a jump higher for the following day.
Wednesday really was more an emotional day. Thursday was dominated by earnings reports, especially strong earnings from Facebook Stock among others. After the close earnings were mixed with Amazon disappointing but Microsoft rallying higher. Other stocks that reported earnings were mixed.
If oil can continue to climb Friday should see a higher close. If oil falls, it will pressure the market along with some of the weaker earnings reports to close negative.
The sideways pattern does seem to indicate though, that the market will not break down at this point. On Wednesday the bias was for the market to move higher but the Fed ended any chance for a rally on that day. Thursday seemed to be more a day to “make sure” the market wasn’t going to fall back. That means overall there is still enough of a bias to upside that we should see a positive close on Friday.
Stay FullyInformed With Email Updates
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)
Market Direction External Links
IWM ETF Russell 2000 Fund Info
Market Direction SPY ETF 500 Fund Info