For Thursday the outlook was for stocks to try a bounce and then move lower. Well we didn’t get much of a bounce. A lot of the day was spent going nowhere. The S&P hung around the 2100 level for much of the day. Finally by the close it was at 2101.04. A lot of investors are sitting on the sidelines waiting for the February unemployment numbers on Friday.5
Advance Decline for Mar 5 2015
Volume fell back to 3.1 billion for the day. This is more the type of volume you see around the Christmas period. Volume was evenly mixed with 50% lower and 48% higher. New highs came in at an anemic 81 and new lows are just 39. Again these numbers do not support a rally. We need better up volume and numbers back up to at least 125 minimum to get the market moving back up.
Market Direction Closings For Mar 5 2015
The S&P closed at 2101.04 up 2.51. The Dow closed at 18,135.72 up 38.82. The NASDAQ closed at 4982.81 up 15.67.
Market Direction Technical Indicators At The Close of Mar 5 2015
Let’s review the market direction technical indicators at the close of Mar 5 2015 on the S&P 500 and view the market direction outlook for Mar 6 2015.
Market Direction Technical Analysis for Mar 5 2015
Stock Chart Comments:
The S&P stayed pretty close to the 2100 level for the entire day. By the close it managed to hold the 2100 level and closed right at the 20 day simple moving average (SMA) or the Middle Bollinger Band.
The Upper Bollinger Band continued to turn down and the Lower Bollinger Band continued moving higher as stocks shortly may be heading into a Bollinger Bands Squeeze. This could be interesting. If the squeeze is formed by the start of next week, we could see the Squeeze end with the S&P shooting back up. I will be watching this with great interest.
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 turned back positive today but it actually is more neutral than either positive or negative.
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. On March 4 it issued a very weak sell signal of negative 0.26. This sell signal has to be confirmed and today the sell signal moved to negative 1.07. I am not going to confirm the sell signal today. That’s a fairly weak confirmation. Let’s see what Friday bring and then decide.
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, overbought and continued to turn lower today. Note that at this point it is not dropping rapidly despite the action of the past three days.
Rate of Change: Rate Of Change is set for a 21 period. The Rate Of Change is choppy and turned lower again today. With a reading of 2.37 the Rate Of Change is indicating that the trend up is in jeopardy. However the signal is up slightly from yesterday’s signal although not enough to indicate an end to the weakness yet.
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.
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.
Market Direction Outlook for Mar 6 2015
Technical indicators on Thursday continue to indicate that weakness is still hanging around stocks. Two indicators are pointing down, two indicators are weak and two indicators are trending sideways more than up or down. With the technical indicators almost evenly split 2, 2 and 2, the outlook is definitely mixed for Friday. a lot will depend on the unemployment numbers on Friday.
Right now though stocks still look set to try to push back up but the amount of weakness there is makes that highly unlikely for Friday.
For Friday then, it is a mixed outlook with the bias remain to the downside. There is one item worth noting though. The S&P closed at the Middle Bollinger Band. Often stocks try to bounce off the important Middle Bollinger Band. That could mean we may see a bit of a bounce attempt again tomorrow but the open revolves around the unemployment report.
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