As expected the market today was weak and pulled back. The Weekly Initial Unemployment Insurance Claims report bothered a lot of investors as it showed a slight increase to 282,000 which was a 5 week high, but the rate of layoffs by employers is now at a record low. This adds to fears that the Fed will indeed raise rates this year and perhaps by September which is just 3 months away.
Advance Decline Numbers for May 28 2015
Volume once more was anemic with just 2,9 billion shares traded. 59% of that volume was to the downside and 39% was to the upside. New highs were 61 but new lows rose to 57. This does not look like consolidation but more nervousness than outright selling.
Market Direction Closings For May 28 2015
The S&P closed at 2,120.79 down 2.69. The Dow closed at 18,126.12 down 36.87. The NASDAQ closed at 5,097.98 down 8.62.
Market Direction Technical Indicators At The Close of May 28 2015
Let’s review the market direction technical indicators at the close of May 28 2015 on the S&P 500 and view the market direction outlook for May 29 2015.
Market Direction Technical Analysis for May 28 2015
Stock Chart Comments:
The drop today in the S&P was not nearly as pronounced as Tuesday’s. The low for the day was 2112.86 but investors pushed back and closed the index down just a few points. 2100 was not tested at all today which puts in place a higher low again today keeping alive the hopes of the bulls for higher prices.
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 stay positive today and turned sideways but did not pullback.
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 weak sell signal today.
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 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 neutral.
Market Direction Outlook for May 29 2015
For the final trading day of May the technical indicators are once again mixed. Two have sell signals, two are neutral and two are positive. The candlestick at the close today is known as a hanging man and tends to be bearish following a rise such as we saw yesterday.
In general then the outlook for Friday is continued weakness, low volume and a negative close.
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