The catalyst for stocks on Tuesday was bank earnings out of JP Morgan which surprised to the upside and beat estimates by 10 cents per share. The big gains came from the energy sector which moved higher following a deal with Iran that left the country still with sanctions in place. Oil rebounded on the news.
Advance Decline Numbers for July 14 2015
Volume came in at 3 billion for Tuesday. New highs rose to 110 while new lows fell back to just 40. 69% of all volume was moving to the upside on Tuesday. Tuesday marked the 4th day of gains making it the best rally since January for stocks.
Market Direction Closings For July 14 2015
The S&P closed at 2,108.95 up 9.35. The Dow closed at 18,053.58 up 75.90. The NASDAQ closed at 5104.89 up 33.38.
Market Direction Technical Indicators At The Close of July 14 2015
Let’s review the market direction technical indicators at the close of July 14 2015 on the S&P 500 and view the market direction outlook for July 15 2015.
SPX Market Direction Technical Analysis for July 14 2015
Stock Chart Comments:
The S&P rally on Tuesday was into its fourth day and gains were less but still impressive. The 20 day simple moving average (SMA) is no longer falling but turning back up. The index closed above the 50 day moving average. The 2100 level was reached today and the index closed just below it.
Support and Resistance Levels:
These are the present support and resistance levels. These levels have hardly changed in months as the market continues to move sideways.
2100 was light support and is now light resistance. Stocks will have to stay above it to change it back to solid support and convince investors that the market has staying power and will push well beyond 2100. That still does not appear to be the case.
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 pullback in January and February.
Weak support is at 1970. Stronger support is 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 and bring to question whether the bull market is finished.
Momentum: For Momentum I am using the 10 period. Momentum turned positive today.
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 today.
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 but falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal has changed to up.
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 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 signaling up for stocks.
Market Direction Outlook for July 15 2015
Yesterday I indicated that the trend was back to up for the S&P. Today has built on that change in trend and is being supported by all the technical indicators. Four days of rally though often will enter a period of weakness. The indicators don’t point to that weakness developing on Wednesday but it could start. Janet Yellen speaks on Wednesday and often that can be a game changer. I doubt there is any rate change coming this summer but Yellen has assured investors that there will be a rate increase this year. I am not expecting anything new in her testimony on Wednesday.
For Wednesday stocks should be weaker than today but they should still advance so the outlook is for a weak advance.
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