The outlook for stocks on May 7 was for stocks to bounce but remain weak. The outlook is primarily sideways heading into the jobs numbers on Friday. Stocks spent much of the day trying to climb and closed up 7.85 points or about 0.38% on the day in what was a rather uninspiring day. Still though, the selling subsided for the day at least and investors are now ready to tackle the jobs numbers Friday morning.
Advance Decline for May 7 2015
Volume dropped by just 100 million shares on Thursday with 3.7 billion shares traded. Of those shares 54% were moving higher and 44% were lower. New lows fell back slightly to jusyt 49 while new highs were almost unchanged from Wednesday, at 26. All in all it volume showed a slight up bias.
Market Direction Closings For May 7 2015
The S&P closed at 2,088.00 up 7.85. The Dow closed at 17,924.06 up 82.08. The NASDAQ closed at 4945.54 up 25.90.
Market Direction Technical Indicators At The Close of May 7 2015
Let’s review the market direction technical indicators at the close of May 7 2015 on the S&P 500 and view the market direction outlook for May 8 2015.
Market Direction Technical Analysis for May 7 2015
Stock Chart Comments:
The S&P recovered back to close at the 50 day simple moving average (SMA). The close today was not above yesterday’s open so the outlook remains unchanged.
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 negative and falling.
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 confirmed sell signal on May 5. Today the signal is strengthening to the downside.
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 negative and rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change has signaled a change to the downside. There is no change in yesterday’s signal.
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 issued a sell signal yesterday which was confirmed today.
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 lower still for stocks and did bounce slightly today. Another up day on Friday could see a buy signal from the Fast Stochastic.
Market Direction Outlook for May 8 2015
Today was an uninspiring day for market action. Momentum remains bias to the downside despite the rebound today. All the technical indicators are still pointing lower for stocks.
Friday though is facing the April non-farm payroll numbers and they are often a game changer. Exactly how they will change stocks this time around is difficult to judge. No one knows exactly what types of numbers investors need to see to jump-start the rally again. Higher numbers of unemployed would mean the economy is slowing but could assist in delaying any Fed rate hike, but if the economy is slowing then stocks are fully valued, so how much upside is there for stocks then?
If the jobs numbers show more employed, this could mean a June rate increase which would mean stocks will be under pressure. That won’t be good for stocks either. Looking at the two scenarios, you have to wonder what scenario would be best for stocks.
Friday then is a toss-up, but beyond Friday markets still look like they want to move lower. So if Friday is an up day, then Monday could be the next down day. Basically then, it is all about the jobs numbers.
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