Today was a lot choppier than yesterday as stocks were weak in the morning and often dipped into the negative. The market though was easy to follow by looking at the intraday bottoms and tops which pointed out by lunch hour that the market was climbing. The anticipated outlook for today was for the market action to be choppy but for a positive close. I had not expected a close very far above 1980. However in the end, the market pushed to close at 1986 which was impressive and a bit unusual for the S&P. Since January 2015 the market has shown a reluctance to follow though the day after big up days. Today was an exception from that pattern, which is a positive for stocks for Thursday.
Index Closing Prices
The indexes closed almost at the highs for the day, down very slightly from the intraday highs. The S&P closed at 1,986.45 up 8.10. The Dow Jones closed at 16,899.32 up 34.24. The NASDAQ closed at 4703.42 up 13.83.
Advance Decline Numbers
Volume fell slightly to 4.67 billion which is still average. By the close 84% of all volume was moving higher and 65% of all stocks were rising. There were 54 new highs and 14 new lows. New highs pulled back slightly and new lows fell slightly as well. Today though still saw another day where new highs outpaced new lows which is a good sign for stocks for Thursday..
The NASDAQ saw 1.91 billion shares traded which is average. 70% of all volume was being traded to the upside and 64% of all stocks were rising. There were 33 new lows and 31 new highs.
The NASDAQ is trying to build some strength to the upside and finally outpace new lows with more new highs.
Market Direction Technical Indicators At The Close
SX Market Direction Technical Analysis for Mar 2 2016
Stock Chart Comments:
The S&P closed above both the 50 and the 100 day moving averages for the second day.
The Upper Bollinger Band is continuing to climb higher. The 20 day moving average is also continuing to rise. The 200 and 100 day moving averages are still leading the market. The closing candlestick today is only somewhat bullish for Thursday and often is followed by a downtrend for few days.
Support and Resistance Levels:
These are the present support and resistance levels. These levels have not changed since January 2015.
2100 is resistance.
2075 was light support and is also resistance. Below that is 2050 which is resistance.
Stronger support was at 2000 which is now resistance.
Weak support is at 1970 while stronger support is at 1956 and technically it is more important than 1970 for the market. 1940 is light support as is 1920. 1900 is more symbolic than anything else.
1870 is support. 1840 continues to be support. The 1820 level is light support. The strongest support level is at 1800.
1775 and 1750 are both 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 all-time high of 2134.72. This would be the biggest correction since the plunge in 2011 of a 20% pullback. A pullback to 1750 from the all-time high would be a drop of 384 points for a decline of 18%. A pull-back of that size would definitely stun investors and bring to question whether the bull market which started in 2009 is finished. From 1750 it is an easy slide to 1600 which was near the market top in 2007.
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive but overbought.
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 buy signal Feb 16 which is back strengthening on Wednesday.
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 and rising and overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive but is now trending sideways. This signals little change is expected at the present time.
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 up for stocks. It is extremely overbought.
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 pointing up for stocks. It is now extremely overbought.
Market Direction Outlook for March 3 2016
The technical indicators remain supportive of the market rally continuing. The closing candlestick can often be bearish but it will be an opportunity to put in place more positions, if necessary. On Thursday I would expect more weakness to demonstrate itself and a lower close would not be unlikely. As well, stocks may trend sideways as investors prepare for the unemployment report for January which is released
For Thursday then watch for stocks to be weak, stay under pressure but continue to climb.
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