The outlook for the start of June was for a rally to start the day but then weakness and a lower close. Instead while the morning rally did turn to weakness and moved lower, the afternoon saw a decent rally attempt and then more weakness but a positive close. Much of the strength on Monday was caused by European markets which were higher on the hopes of a Greek positive outcome. At the same time numbers from home were a bit more upbeat. Personal income rose 0.4% which was better than expected. The PMI Manufacturing Index was pegged at 54 which again was better than expected. As well construction spending rose 2.2% which was a lot better than the expected 0.7%. All of this helped investors but at the same time, these stats also should give the Federal Reserve more ammunition for reasons to commence interest rate hikes.
Advance Decline Numbers for June 1 2015
Friday saw one of the best days in months with 4 billion shares traded. Today volumes dropped again, with just 3 billion shares traded. This is a plunge of a billion shares in just a single day. This is what continues to hurt stocks. Of the volume traded 47% was to the downside and 51% to the upside. New highs and new lows came in at 64 each. The market remains stuck in a sideways pattern and volume has become indicative of the struggle facing stocks.
Market Direction Closings For June 1 2015
The S&P closed at 2,111.73 up 4.34. The Dow closed at 18,040.37 up 29.69. The NASDAQ closed at 5,082.93 up 12.90.
Market Direction Technical Indicators At The Close of June 1 2015
Let’s review the market direction technical indicators at the close of June 1 2015 on the S&P 500 and view the market direction outlook for June 2 2015.
Market Direction Technical Analysis for June 1 2015
Stock Chart Comments:
Stocks today moved back up although in the morning they fell to 2102.54 which was lower than Friday’s low. The high today was also lower than Friday’s high so the pattern of lower highs and lower lows continues for the SPX. The candlestick at the close was indecisive and showed just how split investors remain on the direction stocks are taking. Stocks on Monday closed below the Middle Bollinger Band.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 is very 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 negative and moving sideways.
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 May 29 which was confirmed 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 negative and moving sideways.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change moved up again today and is showing signs that it is trying to recover back to up. It remains doubtful that it can recover at present.
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 still signaling down 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 down for stocks but almost made a buy signal at the close.
Market Direction Outlook for June 2 2015
For the second day of June the technical indicators are biased to the downside with 5 indicators negative or with sell signals and just one indicator trying to turn positive. The trading today established a lower low and a lower high from Friday’s market. In general then stocks look set to move lower on Tuesday. However today was not too bad a day and stocks managed to recover some of the losses from Friday. Another bounce may also be in the works although overall the outlook is poor for stocks.
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