The outlook for Tuesday was for a bounce but a lower close. Both of these occurred during the day but the decline into the close left the market with a probable lower day for Wednesday. The biggest move on Tuesday was in bonds which declined further on interest rate concerns.
Advance Decline Numbers for June 2 2015
Tuesday saw another 3 billion share day. Despite the decline in the index, up volume comprised 62% of all trades while down volume was 37% on Tuesday. New highs came in at just 43 but new lows were only 27.
Market Direction Closings For June 2 2015
The S&P closed at 2,109.60 down 2.13. The Dow closed at 18,011.94 down 28.43. The NASDAQ closed at 5,076.52 down 6.40.
Market Direction Technical Indicators At The Close of June 2 2015
Let’s review the market direction technical indicators at the close of June 2 2015 on the S&P 500 and view the market direction outlook for June 3 2015.
Market Direction Technical Analysis for Jun 2 2015
Stock Chart Comments:
In the morning stocks fell to the 50 day moving average which brought in some buying. Buyers pushed the S&P up to above the Middle Bollinger Band but still below Monday’s intraday high. This set up a pattern of higher lows which resulted in moderate selling into the close. The close left a doji-cross candlestick hanging above the 50 day moving average. Often the doji-cross candlestick signals a down day ahead. The best aspect of Tuesday’s trading was that the S&P stayed above 2100 for another day.
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 lower.
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. Today the sell signal continued to strengthen.
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 positive and moving higher.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change moved down today and is still showing signs that it is trying to recover back to up. The signals are poor for upside action.
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 and failed to issue a buy signal today.
Market Direction Outlook for June 3 2015
For Wednesday the technical indicators are split with 4 pointing lower for stocks, 1 neutral and 1 moving higher. As well the doji-cross at the close today is also signaling a poor day for the bulls on Wednesday. However after almost 3 days of a slide in stocks only broken by Monday’s poor performance, stocks might surprise with a bounce on Wednesday. However any bounce is suspect and based on the charts and technical outlook, the move lower remains the more dominant side of trading at the present time. For Wednesday stocks look set to try to bounce again but close lower.
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