Friday started off weak on the back of another “good” unemployment report. Investors and analysts will now become more focused on whether the Fed will raise rates in March or possibly April at the latest. Meanwhile the numbers continue to show that the economy is not as bad as analysts keep predicting and indeed the US appears to be one of the brightest economic spots on the globe presently. By late morning the S&P was climbing and the index pushed above 2000 for the first time since January 5.
Index Closing Prices
The indexes closed off their highs for the day. The S&P closed at 1,999.99 up 6.59. The Dow Jones closed at 17,006.77 up 62.87 and back above 17000. The NASDAQ closed at 4,717.02 up 9.60.
Advance Decline Numbers
Volume rose to its highest level this year at 6.05 billion. By the close 75% of all volume was moving higher and 63% of all stocks were rising. There were 84 new highs and 11 new lows. This marked another day of new highs outpacing new lows.
The NASDAQ saw 2.17 billion shares traded which is slightly above average. 60% of all volume was being traded to the upside and 58% of all stocks were rising. There were 31 new lows and 40 new highs.
The NASDAQ is the weakest of the three primary indexes but it is finally showing new highs pulling away from new lows.
Market Direction Technical Indicators At The Close
SPX Market Direction Technical Analysis for Mar 4 2016
Stock Chart Comments:
The S&P closed just below the 200 day moving average after punching through it during the day.
The Upper Bollinger Band is continuing to climb higher and is above the 200 day moving average indicating there is more upside to the rally, still to come. The 20 day moving average is also continuing to rise and the 50 day moving average is also turning higher. The 200 and 100 day moving averages are still leading the market. The closing candlestick on Friday is only somewhat bullish for Monday and often is followed by a weak day or two.
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 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 buy signal Feb 16 which is back strengthening on Friday.
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, 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 indicates that further rising prices are stalled at present.
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 but is almost ready to issue a sell signal. 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 but it too is ready to issue a sell signal. It is now extremely overbought.
Market Direction Outlook for March 7 2016
For Monday the market is extremely overbought and facing stiff resistance at the 2000 level. It should take a couple of days to break through resistance. Monday should see some weakness as 3 technical indicators are showing extremely overbought. However all the indicators are pointing to the rally not ending yet therefore any pullback should be temporary.
For Monday watch for weakness but stocks still have further to climb.
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