The market direction outlook for Thursday was for stocks to face some weakness but close positive. Surprisingly it was the NASDAQ that closed positive. The S&P closed almost unchanged as did the IWM ETF (Russell 2000 small caps). The Dow fell back just 21.97. In general Thursday saw stocks stay in a holding pattern ahead of the employment numbers on Friday.
Unemployment Numbers
The general consensus is for 210,000 non-farm payrolls to have been added in April which would push the unemployment rate to 6.6 percent. There are a handful of economists predicting lower numbers and an unemployment rate unchanged. Meanwhile there are a number of economists who believe the number will be better than 210,000 and could surprise stocks with strength in employment. They believe tomorrow’s numbers will show an acceleration in the number of new jobs with monthly employment starting to return to more normal post-recession levels of 250,000 plus each month. These types of numbers would be a sign of a full recovery underway and would bolster the Fed outlook for raising interest rates. Rising interest rates would be bad for stocks so tomorrow’s numbers could see a lot more volatility within stocks.
Market Direction S&P Intraday Chart May 1 2014
Two charts to show this evening. The first chart is the 1 minute for May 1 on the S&P. We are back to the usual pattern. The morning put in the low for the day and the morning high ended up being the high for the day. This set up another morning trade using the Trading For Pennies Strategy. This morning pattern is becoming dominant for stocks and making the penny trade simple to implement. Meanwhile after the morning high today, stocks declined into the close with the S&P closing almost unchanged on the day.
Market Direction S&P Intraday Chart 10 Day
The second chart is of the 5 minute intraday chart of the S&P 500 for the past 10 days. I want to show this chart this evening to show that overall the market is not really going anywhere. On March 22 the S&P hit an intraday high of 1884.89 before pulling back. Today the S&P is back to the same level, closing just slightly under 1884.89 today.
Advance Declines For May 1 2014
Advancing issues made up 55% of the volume today and declining issues made up 42%. Meanwhile new highs reached 142 which was higher than yesterday and new lows were almost unchanged at 83. Just to mention again that the number of new highs is not encouraging. Investors need to see numbers above 250 to really show strength to the upside.
Market Direction Closings For May 1 2014
The S&P closed at 1883.68 down 0.27. The Dow closed at 16,558.87 down 21.97. The NASDAQ closed at 4127.45 up 12.90 and still just below the 100 day EMA. The Russell 2000 ETF IWM fell 4 cents to close at $111.94. You can tell from the numbers that stocks were in limbo on Thursday waiting for the Friday employment report.
Market Direction Technical Indicators At The Close of May 1 2014
Let’s review the market direction technical indicators at the close of May 1 2014 on the S&P 500 and view the market direction outlook for May 2 2014.
The 1750 level continues to hold the S&P up since the correction ended in early February. All the levels of any support above 1800 have been broken and will need time to heal and create support again. Any downturn in stocks will quickly see these levels above 1800 break. The only level above 1800 that has any support worth mentioning is the 1840 level. There is still no change to this. I am still expecting that at some point in the spring to summer period stocks will correct down to the 1750 level.
For Momentum I am using the 10 period. Momentum has been the best indicator over the past four months, replacing MACD as the most accurate indicator. Momentum is still positive but is moving slightly lower.
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 April 22 and today MACD is still positive and continues to climb higher.
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 continuing to provide positive readings and is moving sideways at present.
Rate Of Change is set for a 21 period. The rate of change is negative for a second day indicating a lack of fresh capital flowing into stocks.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is signaling market direction is up for tomorrow and it is now extremely overbought.
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 continues to signal that tomorrow will see stocks higher and it too is overbought.
Market Direction Outlook And Strategy for May 2 2014
April is over and the first day of the month saw stocks sitting almost unchanged as investors get ready for the unemployment number this Friday. The overall direction remains up. The market direction technical indicators are not overly strong, but they are positive at a ratio of 5 to 1. The employment number for tomorrow is the next catalyst for stocks. I will be writing more tomorrow in the morning as the market direction develops following the employment report.
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