The outlook for Wednesday was for stocks to be weak and move lower. A lot of the weakness is attributed to Apple and Microsoft which spooked some investors and pushed a variety of stocks lower including Intel, IBM, Biogen, Viacom, Analog Devices, Avago, Micron, Freeport-McMoran, Caterpillar and many others. The selling pushed the S&P down to the 2110 level which then led to a bounce and a close down just 5.06 points to 2114.15.
Advance Decline Numbers for July 22 2015
Volume rose again on Wednesday with 3.7 billion shares traded across New York. New lows had a huge jump today from yesterday’s 199 to 322 new 52 week lows. Commodity stocks in particular are being hard hit especially miners and gold. New highs were 67. Of the volume traded 56% was to the downside while upside came in at 42%. Across the board declining issues continue to outpace rising issues. Despite the index falling just 5 points today, the advance decline numbers remain bearish.
Market Direction Closings For July 22 2015
The S&P closed at 2,114.15 down 5.06. The Dow closed at 17,851.04 down 68.25 and well off the day’s low. The NASDAQ closed at 5,171.77 down 36.36 and well off its lows also.
Market Direction Technical Indicators At The Close of July 22 2015
Let’s review the market direction technical indicators at the close of July 22 2015 on the S&P 500 and view the market direction outlook for July 23 2015.
Market Direction Technical Analysis for July 22 2015
Stock Chart Comments:
We have now had two days of declines. While today’s decline was not as dramatic as Tuesday’s, there are signs that a bounce could be in the works but it may be minor.
The 20 day simple moving average (SMA) refuses to recover and is getting ready to fall below the 100 day moving average.
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 is light support. 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 is positive and back rising today despite the selling which would indicate we could see a rebound on Thursday or even a partial attempt to rebound.
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 July 14. The up signal is a bit weaker than Tuesday but not by much which would indicate today’s selling was not strong enough to change the underlying market direction.
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 fback pushing toward overbought which could again signal a possible rebound on Thursday.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal has turned mildly negative again pointing to more sideways action 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 down for stocks and it is overbought.
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 and is also overbought.
Market Direction Outlook for July 23 2015
Today when stocks reached the 2110 valuation they bounced back. It is a handful of stocks that took the market lower today but investors are becoming a bit more nervous. Volume rose today and the rising number of new lows shows that investors are leaving commodity stocks, particularly the miners and gold.
Overall the technical indicators are more bearish than bullish but there are signs we could see a bounce Thursday and an attempt to close positive. Overall though stocks look like they will stay weak. On Thursday then look for a possible rebound but any rally from the last two days is suspect so stay cautious.
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