The outlook for Monday was for stocks to experience some weakness but to close positive. The weakness was all in the morning but once that ended stocks climbed to record highs on the S&P and the Dow.
Advance Decline Numbers for May 18 2015
Volume was terrible on Monday. Only 2.9 billion shares were traded, one of the slowest days this year. Of that volume 55% was moving higher and 43% lower. There were however 110 new highs and 27 new lows. This marked the first day in weeks with over 100 new highs on the day. While volume was horrendous on Monday the number of new highs reaching over 100 is the most encouraging statistic in weeks for the markets to keep moving higher..
Market Direction Closings For May 18 2015
The S&P closed at 2,129.20 up 6.47. The Dow closed at 18,298.88 up 26.32. The NASDAQ closed at 5078.44 up 30.15.
Market Direction Technical Indicators At The Close of May 18 2015
Let’s review the market direction technical indicators at the close of May 18 2015 on the S&P 500 and view the market direction outlook for May 19 2015.
Market Direction Technical Analysis for May 18 2015
Stock Chart Comments:
A bit of weakness in the morning is all that traders needed on Monday. They jumped in and started buying, pushing the S&P to a new all-time high. While it sounds great “new all-time high”, the gains are actually miniscule for the year so far. However the close set the market up for another up day on Tuesday.
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 trending sideways.
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 that was confirmed on May 15. Today that buy signal continued to gain strength.
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 moved up again today and is signaling that the change in trend is underway and it is up.
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 19 2015
Monday’s move higher was supported by the technical indicators which are all pointing to higher values for stocks this week. For Tuesday the outlook is up. The close on Monday saw the indexes just off their highs. That might set up the market for a pop at the open on Tuesday and then some weakness into the mid to later morning. From there I am expecting further upside in stocks.
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