Market Direction Outlook For Nov 12 2015 – Weakness and Lower

Stocks on Wednesday were buffeted by the retailers with Macys Stock (M) leading the decline.  By the close of the day Macys Stock was down 14% to close at $40.44 near the low of the day which was $39.75. It was the worst day since the vicious bear of 2008 for the retailer and it sent shockwaves throughout the retail industry. The nes that sales were weak seems to be in stark contrast to the employment reports which continue to show growth in employment and the most recent report showed an increase in wages. All of this should point to retailers doing better, but that has not been the case to date.

Macys Stock 5 Year Chart

The stock is now down 45.6% since July when the stock reached a high of $73.61. At the $40 valuation the stock is trading at levels seen back in 2012 and early 2013. Volume today was the biggest single daily volume since 2011.

Mays Stock to Nov 11 2015

Mays Stock to Nov 11 2015

All of this impacted retailers including Skechers Stock which fell 6.29%, Target Stock which was down 3%, Walmart which fell 1.87%, Under Armour which fell 2% and Nike Stock which fell 2%, to mention just a handful of retailers.

Advance Decline Numbers

Volume was 3.6 billion shares with 64% of that volume moving lower. 56% of all stocks on New York were moving lower but there were 110 new lows and 47 new highs. The number of new lows continues to grow which is a warning signal of further downside potential.

Market Direction Closings

The S&P closed almost at the low for the day, 2075.00 down 6.72 but still holding 2075. The DOW closed near its low at 17,702.22 down 55.99. The NASDAQ also closed almost at today’s low, 5,067.02 down 16.22..

Market Direction Technical Indicators At The Close of Nov 11 2015

SPX Market Direction Technical Analysis for Nov 11 2015

SPX Market Direction Technical Analysis for Nov 11 2015

Stock Chart Comments:

The S&P today close at the 20 day simple moving average (SMA). This is the third day for the index to reach the 20 day moving average but the first day that it did not bounce higher off the 20 day. This is a negative sign for stocks. As well the 100 day moving average which was moving higher is now turning lower and moving away from the 200 day moving average. Meanwhile the Lower Bollinger Band has crossed over and above the 50 day moving average which is a sign of weakness. The 50 day which was turning up is not turning lower.

All the signals today by the close were negative for stocks.

Support and Resistance Levels:

These are the present support and resistance levels.

2100 is light support. Stocks have been unable to stay above this level and push higher on numerous occasions. It remains resistance.

2075 is light support. Below that is 2050 which is light support. Stronger support is at 2000 which had repeatedly held the market up throughout each pullback in January and February but failed under the waves of selling in the last correction. Stocks continue to have trouble holding the 2000 level.

Weak support is at 1970 while stronger support is at 1956 and technically it is more important than 1970 for the market. 1940 is light support. 1920 is now light support. 1900 is more symbolic than anything else.

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. So far 1870 has held the market up better than any of the other support levels aside from 2000 which held the market up for months before the collapse in August.

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 of 384.72 points or 18% from the all-time high of 2134.72.  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 use a 10 period when studying market direction. 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 sell signal on Friday Nov 10. Today MACD confirmed the sell signal.

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 falling.

Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive but now turning sideways.

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.

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 pointing down for stocks.

Market Direction Outlook for Nov 12 2015

Technically 4 indicators are signaling down or are negative. Two indicators are positive but weak. The outlook for Thursday is for stocks to attempt a rally but end lower again. The 2075 can only be tested so much before it breaks. Today’s action looked negative especially since bonds were closed, which normally signals an up day for stocks.

For Thursday Nov 12, stocks look set to move lower.

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