For Friday, the final day of February was for markets to show weakness in the morning but for the S&P not to break through 2100. The close was expected to see a modest positive close. Instead the GDP came in at a modest 2.2 percent for the fourth quarter which was weaker than an expected 2.6 percent. Added to this was the report showing manufacturing in the Midwest fell to a five and a half-year low which pointed to contraction. The drop was unusual for the Midwest PMI which has been above 50 for year. Many analysts dismissed the report as incorrect but not all investors did. The close on Friday saw all the major indexes in the red although the losses were only moderate.
Advance Decline for Feb 27 2015
Volume rose slightly on Friday to 3.55 billion shares. 54% of all volume was to the downside and 45% to the upside. New highs came in at just 99 and new lows rose to 30. The number of new highs continues to fall over the past three trading sessions and new lows are starting to rise indicating selling pressure has been building in stocks.
Market Direction Closings For Feb 27 2015
The S&P closed at 2,104.50 down 6.24. The Dow closed at 18,132.70 down 81.72. The NASDAQ closed at 4,963.53 down 24.36.
Market Direction Technical Indicators At The Close of Feb 27 2015
Let’s review the market direction technical indicators at the close of Feb 27 2015 on the S&P 500 and view the market direction outlook for Mar 2 2015.
Market Direction Technical Analysis for Feb 27 2015
Stock Chart Comments:
The S&P continued to drift lower on Friday falling just 6 points but continuing a 3 day gentle slide. All 3 major moving averages are continuing to climb. I had expected the S&P close above 2106 but the index broke through 2106 to close at 2104.50 for the day. Much of the action however was the result of end of month selling following great gains of up to over 5% in the indexes for the month of February so the downside was not totally unexpected.
Support and Resistance Levels:
These are the present support levels.
2100 is very light support. 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 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 positive and falling.
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 buy signal Feb 4. MACD is positive but it continues to drop in strength on Friday and is getting close to a sell signal.
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 positive but beginning to fall and overbought.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is turned back down but in general is stick supporting further upside for stocks.
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 overbought and is now pointing 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 also signaling down for stocks and is very overbought.
Market Direction Outlook for Mar 2 2015
For the first day of March the S&P looks steady despite three days of light selling. Most of the selling in the past 3 days looks more like profit taking than anything else at this point. The technical indicators are mixed with 3 that continue to fall, 2 that are negative and 1 that is still supporting stocks. While definitely mixed, the upside still holds the bias for the upcoming week.
For Monday stocks look set to stay weak but keep the bias to up.
Stay FullyInformed With Email Updates
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)