My outlook for Thursday May 14 2015 was for stocks to remain weaker and move lower. I was not expecting the rally higher that we saw today. The move up places the S&P into its highest level of all-time. Whether the move higher was warranted really does not matter. Investors believed following the Weekly Initial Unemployment Insurance Claims and the latest inflation numbers that the Fed will not raise rates in June. That was enough to push stocks higher even though the volumes once again were poor.
Advance Decline Numbers for May 14 2015
Volume moved lower on Thursday at 3.2 billion shares. Of that volume 66% was to the upside and 32% to the downside. New highs came in at 95 and new lows fell back to 24. These are weak numbers but it is, what it is. Volume continues to be poor and low volume often is followed by spikes higher and lower. That is definitely going to be staying with the markets for sometime yet.
Market Direction Closings For May 14 2015
The S&P closed at 2,121.10 up 22.62. The Dow closed at 18,252.24 up 191.75. The NASDAQ closed at 5050.79 up 69.10.
Market Direction Technical Indicators At The Close of May 14 2015
Let’s review the market direction technical indicators at the close of May 14 2015 on the S&P 500 and view the market direction outlook for May 15 2015.
Market Direction Technical Analysis for May 14 2015
Stock Chart Comments:
Today’s move in the S&P was one of the better single day rallies. While volume is poor, the index still made a new all-time high and was pushed above all the moving averages. The end of the day saw the S&P close right at the high for the day.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 is very light support. Stocks will have to stay above it to change it back to solid support and convince investors that the market has staying power and will push well beyond 2100. That still does not appear to be the case.
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 pullback in January and February.
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 and bring to question whether the bull market is finished.
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 confirmed sell signal on May 5. Today MACD issued a buy signal that must be confirmed tomorrow.
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.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change did move up slightly but not enough to signal a change from neutral to up. The Rate Of Change obviously is looking for another up day to confirm the trend higher.
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.
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 and is overbought.
Market Direction Outlook for May 15 2015
As we come to another options expiry Friday, the market direction appears to possibly be on the verge of breaking out again. I had thought the last rally up was going to break out but that failed to happen. A lot of investors will be looking for stocks to pullback again tomorrow but I don’t think that will be the case.
For Friday I am expecting a weak start to the day and then a move still higher. While technically the market may have been in the mood for an up day after 3 down days in a row, I believe the size of the rally up could be signaling a change once again in the market direction from down to up. At least for Friday at any rate.
Look for the market to be weak to start off the day on Friday and then move higher. I am not expecting a rally of any size to develop, just a positive close.
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