The outlook for stocks for Wednesday was for a bigger bounce than what we saw attempted on Tuesday. All it took was some dovish comments from the Federal Reserve on interest rates along with less selling in China and stocks moved higher. Other factors included a bounce in oil from a 6 month low, a slight dip in the US dollar and a variety of comments on the Shanghai Composite index possibly doubling over the next year. All of this was enough to lure investors back into stocks. On Thursday investors get the important GDP number.
Advance Decline Numbers for July 29 2015
Volume was again above 4 billion shares traded on Wednesday for the second straight day as investors piled into stocks on New York expecting this latest rally to stick. Up volume was 78% and the number of new lows sank to 75 when earlier this week it was above 400. New Highs were just 63 but that could improve shortly if the market continues to climb.
Market Direction Closings For July 29 2015
The S&P closed at 2,108.57 up 15.32. The Dow closed at 17,751.39 up 121.12. The NASDAQ closed at 5,111.73 up 22.53.
Market Direction Technical Indicators At The Close of July 29 2015
Let’s review the market direction technical indicators at the close of July 29 2015 on the S&P 500 and view the market direction outlook for July 30 2015.
Market Direction Outlook for July 29 2015
Stock Chart Comments:
The rise in the S&P has retaken the major averages and pushed the index back to close above the 50 day moving average. The 20 day simple moving average (SMA) is crossing back up and over the 100 day moving average which indicates a good chance the rebound rally could last for another day. The 2100 support level was retaken today and the 2110 level which has no real support was reached and the S&P closed just below it at 2108.57.
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: Momentum is positive but just barely. It should move higher on Thursday if stocks move up further.
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 July 27. The sell signal is still in place but is weaker than previous and could be pointing to the market trying to recover.
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 back to a positive reading but just like momentum it is only barely positive. It needs another up day to turn positive.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal took a big jump higher today and is positive and pointing to more upside for this rally.
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 and moving higher.
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 and to already pushing toward being overbought after just two days of the rally.
Market Direction Outlook for July 30 2015
The close today was strong enough that stocks could experience profit-taking on Thursday, especially if the GDP number is poor. The Fed seemed determined to raise rates this year, even if by only a quarter of a percent. While a move of that small size would be largely symbolic it will still have some impact on stocks. If the GDP number is better than expected stocks could stall and pullback slightly.
No matter what happens in the morning, stocks have enough strength than even a pullback on Thursday should not last. Stocks look set to try once again to move higher before they pullback again. Thursday then has a mixed outlook but for now a rally follow through should be expected by the close of trading, even if the day ends with only a slightly positive close.
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)