I’ve definitely been on the bearish side of this market direction rally. Three days of rallying has moved the S&P to within striking distance of the 50 period moving average. The problem though is that each day opens with a big gap up and then sideways motion on thin volume. Each day of this rally has seen even slimmer volume. But central banks are doing everything to keep the stock markets up, as they continue to talk the liquidity line and do their very best to make sure the stock markets do not pull back. This is heavy manipulation and after 3 days of rally mode the market direction is looking like it wants to rest.
Unfortunately I spent much of this evening writing my Spy Put Options article on using the Williams %R so I don’t have a lot of time for the market direction outlook. For this evening then I am going to move directly to the market direction technical analysis.
Market Direction Technical Indicators At The Close of June 27 2013
Let’s review the market direction technical indicators at the close of June 27 2013 on the S&P 500 and view the market direction outlook for June 28 2013.
For Momentum I am using the 10 period. Momentum remains negative and today it fell back despite the rise in the stock market. This is never a great sign of market direction strength.
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 24. The sell signal is still negative but took a big jump higher today.
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 positive.
Rate Of Change is set for a 21 period. The rate of change is negative for the 13th day but is moving higher.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is signaling that the market direction is up.
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 indicating that the market direction is up.
Market Direction Outlook And Strategy for June 28 2013
The constant insistence by the Fed that liquidity will remain for months if not longer stopped the decline and has pushed stocks back up. Today though the 50 period was almost reached and then the market closed below it.
Momentum is weak, MACD is still negative, rate of change is negative. Meanwhile Fast Stochastic and Slow Stochastic are still pointing higher. This is a prime reason to sell puts as a manor investment method since often the market direction is not clear but I can stilll earn income by selling out of the money on stocks I would own is assigned. For Friday I think we have a good chance the market will try for the 50 period and fail. I think tomorrow we could move sideways with a push lower in the day, but then I have been primarily on the wrong side for the past 3 days.
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Market Direction External Links