The outlook for Wednesday for the SPX was for weakness but a higher close. Shortly after 2 PM it looked like the close would be higher as the S&P set another new all-time higher pushed to 2134.72 before pulling back to close down 1.98 points.
Advance Decline Numbers for May 20 2015
Volume picked up in the mid-afternoon and managed by the close to reach 3 billion shares. Volume was evenly split with 49% moving higher and 49% moving lower with 2% unchanged on the day. New highs still broke 100, reaching 113 new highs. New lows came is at 31, a decline from Tuesday’s trading.
Market Direction Closings For May 20 2015
The S&P closed at 2,125.85 down 1.98. The Dow closed at 18,285.40 down 26.99. The NASDAQ closed at 5071.74 up 1.71.
Market Direction Technical Indicators At The Close of May 20 2015
Let’s review the market direction technical indicators at the close of May 20 2015 on the S&P 500 and view the market direction outlook for May 21 2015.
SPX Market Direction Technical Analysis for May 20 2015
Stock Chart Comments:
Not much difference in the stock chart today except that the close saw another doji-cross formed. Usually this is a signal indicating weakness to the uptrend.
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 toward overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change moved sideways today. This could be signaling that the trend change to up is in jeopardy of failing but additional confirmation will have to be seen on Thursday before any possible change in trend can be expected.
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 down for stocks. The Slow Stochastic is 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 signaling down for stocks and is overbought.
Market Direction Outlook for May 21 2015
The action today followed the candlestick from yesterday which predicted weakness. The same candlestick appeared at the close of today which signals further weakness for Thursday.
Technically the indicators are split with momentum, the ultimate oscillator and rate of change signaling higher, the rate of change signaling a possible change in trend and the two stochastic indicators moving to sell signals.
In this kind of environment the doji-cross candlestick from the close probably has the strongest biased. Therefore for Thursday stocks may once more be weak but again a positive close could be in the works.
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