As expected the market bounced back today. The most interesting part of today’s move was actually in the NASDAQ. I definitely should have bought the TQQQ which is the UltraPro NASDAQ 100 ETF. This is a 3 times ETF which today was up 4.81%. I will try not to make that mistake again. Much of the rally’s strength was on the back of news that Greece may not default on its next debt repayment obligation.
Advance Decline Numbers for May 27 2015
Volume fell back today closing at 3.1 billion shares traded. 72% of that volume was to the upside but new highs came in at just 55 and new lows moved to 45.
Market Direction Closings For May 27 2015
The S&P closed at 2,123.48 up 19.28 almost wiping out Tuesday’s drop of 21.86 points. The Dow closed at 18,162.99 up 121.45 for a gain better than 50% of Tuesday’s drop. The NASDAQ closed at 5,106.59 for a gain of 73.84.
Market Direction Technical Indicators At The Close of May 27 2015
Let’s review the market direction technical indicators at the close of May 27 2015 on the S&P 500 and view the market direction outlook for May 28 2015.
Market Direction Technical Analysis for May 27 2015
Stock Chart Comments:
The rebound was much stronger than I would have expected. The belief that Tuesday’s drop was overdone seemed to capture the attention of many investors who jumped back in and pushed stocks almost back to where they were on Friday. The S&P is back above the 50 day simple moving average (SMA) and just points away from the all-time high.
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 turned back to up today and is rising.
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. The buy signal is now at just 0.17 and was unchanged today despite the big rally back up. This needs to be watched for signs that the market direction is not going to recover.
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 fell dramatically yesterday and recovered almost as dramatically today. It is still negative buy rose almost to positive.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change moved up just slightly today. It is still signaling that the latest trend up may be in jeopardy.
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 still signaling down 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, but the signal is weak.
Market Direction Outlook for May 28 2015
Technically 3 indicators are pointing up for stocks and 3 are pointing down. This has been typical with this market and makes it difficult to judge the direction. A bounce today was expected although not as strong as was seen. For Thursday I would expect some upside but then a turn lower or at least sideways. My personal outlook, aside from the technical indicators is for stocks to wander and remain weak.
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