The market direction outlook for Thursday was for stocks to bounce harder than they had tried on Wednesday. The failure of the bounce on Wednesday did not set the stock market up for a pullback, but instead set the market up for a stronger rally attempt on Thursday. With weak retail sales being announced, and a declining cost per barrel of oil you would have thought that the market might have pulled back. However investors are wondering if the weaker than expected retail sales will stall the Fed from raising interest rates any earlier than possible September. Combined with an oversold environment assisted stocks in rebounding today. Unlike like Wednesday, today’s rebound stuck it out into the close.
Advance Decline for Mar 12 2015
When I checked volume shortly after 2:00 PM it wasn’t up to 2 billion shares. However in the last hour and half investors obviously felt that stocks were going to hold their ground unlike Wednesday, and investors started to buy again. Volume by the close was up to 3.4 billion. Up volume dominated once again with 71% of all trades to the upside with just 28% down. New Highs came in at 103 versus 49 to the downside. The late day buying may have set the market up for another attempt to push back to the old highs and try again.
Market Direction Closings For Mar 12 2015
The S&P closed at 2065.95 up 25.71 . The Dow closed at 17,895.22 up 259.83. The NASDAQ closed at 4893.29 up 43.35.
Market Direction Technical Indicators At The Close of Mar 12 2015
Let’s review the market direction technical indicators at the close of Mar 12 2015 on the S&P 500 and view the market direction outlook for Mar 13 2015.
Market Direction Technical Analysis for Mar 12 2015
Stock Chart Comments:
Yesterday I indicated there were signs yesterday, even into the drop at the close that the market would rally today. The rally today was expected to be bigger than Wednesday and indeed it was. The rally pushed the S&P back above the 50 day moving average.
This move up has strengthened support at 2050 and definitely set the market up for a move above 2075 on Friday.
Yesterday I commented that the market looked better than any of the three prior days. That was true. Today however the market looked better than any of the days since Thursday of last week.
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 negative but rising.
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 today was still strongly negative but is also rising.
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 but it too is rising.
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 today turned sideways and clung to the neutral zone. It is undecided on the next move but looks to be signaling that the next move will not be lower.
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 down for stocks but is close to a buy signal.
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 up for stocks, is extremely oversold but issued a buy signal today.
Market Direction Outlook for Mar 13 2015
Technically the indicators are overwhelmingly negative but almost all of them are rising in their signals and the Fast Stochastic is signaling higher for Friday. It also issued a buy signal which must be confirmed on Friday. Stocks have fallen from being overbought to very oversold. This strong technical signal is assisting in pushing stocks higher. The slower retail sales also has investors excited that the Fed may have little choice but to hold off on any jump in interest rates until the fall at the earliest. All of this is pushing stocks up. The direction for market direction for Friday is higher as the bounce back should continue.
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