The outlook for Thursday for the SPX was for weakness but a higher close. In short, a repeat of what was expected for Wednesday. Today though saw a bit more buying interest although investors in general are skeptical of the new highs. Most are waiting for stocks to pullback. The big move up today came from the Fed who seemed to indicate that there would be no rate change in June. On Friday Fed Chair Janet Yellen will be speaking. Analysts will be watching for any hint of when interest rates may rise.
Meanwhile the weekly unemployment numbers today came in at 274,000 which was an increase of 10,000 from last week’s report. The 4 week moving average is down to 266,250 which is the lowest level since April 2000. The job market is starting to tighten which is something the Fed will be watching.
Advance Decline Numbers for May 21 2015
Volume was almost unchanged on Thursday with just 3.1 billion shares traded marking another low volume day. 60% of that volume was to the upside. However new highs fell to just 72 and new lows were at 26.
Market Direction Closings For May 21 2015
The S&P closed at 2,130.82 up 4.97. The Dow closed at 18,285.74 up 0.34. The NASDAQ closed at 5090.79 up 19.05.
Market Direction Technical Indicators At The Close of May 21 2015
Let’s review the market direction technical indicators at the close of May 21 2015 on the S&P 500 and view the market direction outlook for May 22 2015.
SPX Market Direction Technical Analysis for May 21 2015
Stock Chart Comments:
While the market is closing at new highs, the movement is more sideways than up. Volume is awful. That is the best word to describe it. Almost always when volume is this consistently poor, stocks eventually pullback. That may still be the case.
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 moving 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 but the increase is very minimal..
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 pulling back.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change moved sideways again 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 Friday 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 and 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 up for stocks and is very overbought.
Market Direction Outlook for May 22 2015
With volume so poor it is hard for the market to move convincingly to the upside. The number of skeptics has grown and the recent highs are being ignored by traders and investors. In this kind of environment the S&P could only stay afloat for so long. Friday’s market may surge even slightly if the Fed Chair Janet Yellen says what investors want to say when it comes to the continual delay on interest rate hikes.
For Friday I am expecting a mixed day. The bias that was up has changed direction. The bulls have to get something going to the upside otherwise they risk the market slipping away from them.
I am expecting a bit of buying at the open on Friday and then sideways action until the Fed Chair speaks. That should move markets up or down depending on her stance on interest rate hikes. My personal outlook is for stocks to continue to grind higher on Friday.
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