Someday it will be interesting to see what the Fed does when the next bear market arrives. Maybe it just won’t happen. The outlook for today was all about the Federal Reserve Chair Janet Yellen and what the Fed was going to do with interest rates. Removing the word “Patient” from their outlook but making it fairly obvious there would be little chance of a rate increase for the first half of the year at least, took the downside out of any market pullback. It must be awfully hard to be a bear. Once of the most contrived markets I have seen since I started investing in the 1970’s, continued unabated today.
The outlook for stocks today was all about the Fed. The Fed has become the biggest catalyst the bulls have ever had and the Fed remains rock steady for this market and today was no different.
Advance Decline for Mar 18 2015
Volume on Wednesday was slow until 2:00 PM. By the close volume had more than doubled from prior to the Fed comments reaching 4.1 billion shares, marking one of the heavier days this year. 83% of all stocks were moving higher. New highs were 201 while new lows were 63. With 201 new highs the market is set up to break the old market highs.
Market Direction Closings For Mar 18 2015
The S&P closed at 2,099.50 up 25.22. The Dow closed at 18,076.19 up 227.11. The NASDAQ closed at 4,982.83 up 45.39.
Market Direction Technical Indicators At The Close of Mar 18 2015
Let’s review the market direction technical indicators at the close of Mar 18 2015 on the S&P 500 and view the market direction outlook for Mar 19 2015.
SPX Market Direction Technical Analysis for Mar 18 2015
Stock Chart Comments:
The Fed induced yet another rally. sending stocks to close on the doorstep of 2100 and ready to break to all-time new highs again. With the index back above all major averages and now above the 20 day simple moving average (SMA), a pullback on Thursday in the morning is to be expected but the direction is clearly higher.
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.
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.
Momentum: For Momentum I am using the 10 period. Momentum is positive and 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 is still with the market but the signal is weakening and will soon turn positive.
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 now overbought.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is back pointing to a change in trend back to up, again thanks to the Fed.
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 Thursday.
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 Thursday.
Market Direction Outlook for Mar 19 2015
Technically the indicators are all pointing to the trend changing to up. Even MACD which is still negative, is rising quickly and it won’t take long to turn positive. The outlook is obvious for now. Thursday will see some weakness after the big run-up in the afternoon, but with the Bernanke-Yellen put well in place, there is not much this market can do except move higher.
We will see a higher close for stocks on Thursday. My “Ahead of The Fed Strategy” was exceptional yet again on Wednesday. I can hardly wait for the next Fed meeting or announcement. This strategy has been among the most consistent performers.
For Thursday then, look for market weakness in the morning but a higher close by the end of the day.
For both Canada Members and USA Members I will be posting a series of trade ideas which I will be entering on Thursday and Friday.
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