The outlook for Wednesday for stocks was for the downside direction to continue. Meanwhile after hours a number of factors may assist to bounce stocks on Thursday including a surprising rate cut in South Korea, a move higher in oil prices and a bounce in gold prices despite the high US Dollar.
Advance Decline for Mar 11 2015
Volume on Wednesday pulled back to 3.4 billion shares. 40% of all volume was to the downside while 56% was to the upside. There were 40 new highs and 113 new lows. This numbers are indicating that some investors are bargain hunting. While the new lows at 113 are concerning, the new highs have jumped. This adds support for the chance of a bounce on Thursday.
Market Direction Closings For Mar 11 2015
The S&P closed at 2040.24 down 3.92 . The Dow closed at 17,635.39 down 27.55. The NASDAQ closed at 4849.94 down 9.86.
Market Direction Technical Indicators At The Close of Mar 11 2015
Let’s review the market direction technical indicators at the close of Mar 11 2015 on the S&P 500 and view the market direction outlook for Mar 12 2015.
Market Direction Technical Analysis for Mar 11 2015
Stock Chart Comments:
While the day’s rally was lost in the last hour of trading there are signs a rally could be in the works. The Index closed at the 100 day exponential moving average (EMA)which often signals a bounce attempt. As well the candlesticks are nearing the Lower Bollinger Band which again often signals a bounce attempt. If the market can bounce from here it will retain the higher lows pattern which means it could retry the overall highs again. Personally I don’t think it is possible with the US dollar so high, but certainly stranger things have happen in the stock markets.
Today at the close the S&P did not look like a market ready to fall apart. It did not regain the 2050 level but it did look better today than any of the past three trading days as far as a lack of selling pressure, especially into the close.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 was very light support and is now resistance. 2075 was light support and is now resistance. Below that is 2050 which is also light support. Stronger support is at 2000 which has repeatedly held the market up throughout each recent pullback. That may not happen this time. Weak support is at 1970. Stronger support is then 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 at this point and it is not something I am anticipating at present.
Momentum: For Momentum I am using the 10 period. Momentum is lower 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 weak sell signal on March 4. That sell signal continues to gain strength.
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 deeply oversold.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is choppy and turned lower again today. The rate of change has changed and is supporting a move lower however it is turning sideways and clinging to a slightly negative reading. We could be on the verge of a bounce.
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 prices are ahead and it is deeply oversold.
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 as well and it is extremely oversold.
Market Direction Outlook for Mar 12 2015
There are 3 indicators that are deeply oversold which often signals a bounce. There is one indicator that is sideways and pointing to a possible bounce. There are two that are pointing to stocks continuing to move lower. Basically then there are 4 indicators pointing to a possible bounce and 2 pointing still lower.
The rally attempt today didn’t have enough volume or strength but with the close the losses in the indexes were very small. This would seem to indicate a possible stalling of the pullback and the market attempting to move back up. A rebound rally seems likely but after that I would expect more selling.
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