The outlook for Friday was for stocks to close positive. In general it was a somewhat disappointing day. The S&P closed flat but slightly positive while the NASDAQ closed flat but slightly negative. In general it was another poor day for stocks following the big rally back on Thursday. Friday proved once again that investors are uncommitted to stocks. Big rallies are continuing to see no follow through rallies.
Advance Decline Numbers for May 15 2015
Volume dropped off on Friday to just 3 billion shares. Of that volume 56% was to the upside and 42% to the downside. There were 87 new highs and 14 new lows. The number of new highs continues to point to no real strength to an upside move from here. The new lows points to little chance of a major pullback on Monday.
Market Direction Closings For May 15 2015
The S&P closed at 2,122.73 up 1.63. The Dow closed at 18,272.56 up 20.32. The NASDAQ closed at 5048.29 down 2.50.
Market Direction Technical Indicators At The Close of May 15 2015
Let’s review the market direction technical indicators at the close of May 15 2015 on the S&P 500 and view the market direction outlook for May 18 2015.
Market Direction Technical Analysis for May 15 2015
Stock Chart Comments:
The move higher on Friday was miniscule but intraday it was a new high for the past couple of weeks. The candlestick at the end of the day though was a doji which often signals a move lower for the next day or two.
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 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 buy signal on May 14. On Friday that buy signal was confirmed.
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 falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change did move up slightly again but the outlook is still unchanged.
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 18 2015
The doji candlestick may end up being the most prominent of technical indicators for Monday. If so, then stocks should pullback or at least be weak.
However MACD confirmed the buy signal from Thursday which points to higher prices. As well the technical indicators are overwhelmingly positive for stocks. Therefore I would expect a possible weak day on Monday but with the buy signal from MACD and the other technical indicators being positive, even if Monday is negative, Tuesday should see prices move back up. Therefore any weakness on Monday means little to the overall direction for the start of the week.
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