Analysts on Tuesday can point to anything they want for the reason for the decline in equity markets but only one thing actually matters for Tuesday and Wednesday, the Fed. Whatever the Fed says on Wednesday will control the market direction. It really matters little what the technical indicators are advising for Wednesday. The Fed comments will move this market one way or the other.
Advance Decline for Mar 17 2015
Volume on Tuesday was lower once again, falling another 100 million shares to 3.2 billion. Volume was also mixed almost equally with 45% of shares moving up and 53% of trades moving down. There were 101 new highs and 71 new lows.
The new lows do not indicate a large drop in the market direction is about to occur. At the same time none of the numbers point to any kind of rally commencing either. Everything is on hold for the Fed announcement on Wednesday.
Market Direction Closings For Mar 17 2015
The S&P closed at 20074.28 down 6.91 . The Dow closed at 17,849.08 down 128.34. The NASDAQ closed at 4937.43 up 7.93.
Market Direction Technical Indicators At The Close of Mar 17 2015
Let’s review the market direction technical indicators at the close of Mar 17 2015 on the S&P 500 and view the market direction outlook for Mar 18 2015.
SPX Market Direction Technical Analysis for Mar 17 2015
Stock Chart Comments:
The market gave back a lot of Monday’s rally by the mid-morning but then stocks tried a recovery. By the close stocks were still down but they closed off the lows for the day. The index is still above the three major support levels and continues to point to higher values shortly.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 was very light support and is now resistance. 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 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 and back 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. The sell signal continues to rise on Tuesday.
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 stayed positive and moved higher on Tuesday.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is continuing to point to the index moving 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 up for stocks for Wednesday.
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 for Wednesday.
Market Direction Outlook for Mar 18 2015
Technically the indicators n general continue to show the market is being pressured. However today’s sell-off was not technical but more fundamental with investors worried about the Fed interest rate and what they will hear on Wednesday. There is no actually direction as it depends on the Fed comments which are released starting at 2:30.
A stay on raising interest rates from the spring will keep stocks up and moving higher. A rate increase or the removal of the term “patient” will send stocks lower. We will have to wait and see. I have purchased all 4 trades for my Ahead Of The Fed Strategy for Wednesday.
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