The outlook for today was for stocks to move lower. The Greek debt issue continued to dominate investors’ attention on Thursday. It is certainly looking like Greece will eventually not come to an arrangement. This means Monday’s rally was nothing more than investor enthusiasm. The reality is setting in that the likelihood of an arrangement is small. Greece seems determined to not make the difficult cuts needed. It certainly looks like eventually they will leave the Euro and move back to their own currency. All of this weighed on investors on Thursday and markets showed their concerns.
Advance Decline Numbers for June 25 2015
Volume stayed above 3 billion on Thursday with almost 3.3 billion shares traded. On those shares 66% were moving to the downside. New lows rose to 107 and new highs move up slightly from Wednesday to 83.
Market Direction Closings For June 25 2015
The S&P closed at 2,102.31 down 6.27. The Dow closed at 17,890.36 down 75.71. The NASDAQ closed at 5,112.19 down 10.22.
Market Direction Technical Indicators At The Close of June 25 2015
Let’s review the market direction technical indicators at the close of June 25 2015 on the S&P 500 and view the market direction outlook for June 26 2015.
Market Direction Technical Analysis for June 25 2015
Stock Chart Comments:
Stocks tried to move to the upside, failed and pulled back. The NASDAQ pullback was less dramatic. The S&P however did break 2110 and closed near the important 2100 support level.
The close saw the S&P below the 50 day moving average. It also saw the 20 day simple moving average (SMA) fall lower.
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 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 turned negative 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 on June 18. The buy signal weakened again 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 continued its decline and moved lower almost reaching oversold..
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal still shows that a change in the trend to up is still possible but is starting to gain traction back to the downside.
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 lower 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 also signaling lower for stocks confirmed Wednesday’s sell signal.
Market Direction Outlook for June 26 2015
The problem remains Greece and the Euro. I am not expecting a resolution on Friday and a lot of investors will want to move to the sidelines ahead of the weekend. This Friday is also one of the heaviest days for stocks trades as the Russell 2000 adjusts stocks as do many larger investors.
Technically the indicators are pointing to lower valuations for stocks for Friday. I am in agreement that we will see a lower close.
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