The market direction outlook for Monday Nov 17 2014 was for stocks to trend sideways but with a bias lower. The outlook called for stocks to either bounce at the open due to the G20 meeting ending or for them to start off lower due to the Japan entering a recession. Either way the outlook though by the close was the same, slightly lower. The biggest news today was probably out of Europe where the ECB President advised he is willing to go to almost any lengths to pull Europe away from any possible recession. The problem I see though is with more sanctions being demanded against Russia, this can only continue to hurt Europe.
SPX Intraday for Nov 17 2014
The one minute chart below shows the gap down at the open and the climb to 2042 by around 10:30. The climb was not steady and included a number of pullbacks. This lead to a further pullback which by about 11:30 has the S&P below 2035. That seemed to be enough for the dip buyers who stepped in and pushed the S&P back to 2043 by early afternoon. From there the market drifted sideways with a bias lower and ended up closing almost flat with a gain of just 1.50 which was in the last couple of minutes. Overall despite all the movement and erratic buying and selling, the SPX closed essentially where it had started the day..
SPX Intraday for Nov 17 2014
Advance Declines For Nov 17 2014
Volume came in at 3.1 billion, 100 million less than Friday. Up volume was 49% and down volume exactly the same at 49%. Declining issues though, outpaced advancers with 43% of stock climbing and 54% falling. There were 94 new highs up just slightly over Friday’s 86. New lows were almost unchanged at 43 versus Friday’s 49. In general we are looking at a sideways market. This won’t last much longer.
Market Direction Closings For Nov 17 2014
The S&P closed at 2041.32 up 1.50. The Dow closed at 17,647.75 up 13.01. The NASDAQ closed at 4671.00 down 17.54.
Market Direction Technical Indicators At The Close of Nov 17 2014
Let’s review the market direction technical indicators at the close of Nov 17 2014 on the S&P 500 and view the market direction outlook for Nov 18 2014.
Market Direction Technical Analysis for Nov 17 2014
Stock Chart Comments: The chart is almost identical to Friday’s with the Bollinger Bands Squeeze continuing to form which could push stocks either way. With the market so heavily overbought and already trending sideways the squeeze may end up pushing stocks lower. First line of support is still at 2000.
Strong Support Levels are at 1870 and 1840. Both levels are strong enough to delay the market falling. 1956 and 1970 are back as support for stocks. 2000 is the highest level of support at present and while not strong, it should have enough strength to hold sellers back for at least a day in the event of an interim pullback. I am not expecting this to happen at this stage of the rally. The market direction still looks like it wants to consolidate and then possibly move higher.
The other two support levels not shown in the chart above 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 now the bottom line.
A break of 1750 would mark a severe correction of more than 13% from the most recent high. This would be the biggest correction since April 2012. A pull-back of that size would definitely stun investors at this point and it is not something I am anticipating at this time.
Momentum: For Momentum I am using the 10 period. Momentum is still positive but continues to slide.
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 October 22. MACD is no longer gaining strength and is starting to indicate a possible change in the divergences. Still up but needs to be watched.
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 remains extremely overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change is staying positive and is now at 9.44 up from yesterday. The Rate Of Change is turning lower. Often a reading as high as we saw last mid-week advises that a change is coming to the trend. We will know shortly if that change in trend is back to lower.
Slow Stochastic: For the Slow Stochastic I use the K period of 14 and D period of 3. As the Slow Stochastic tries to predict the market direction further out than just one day. The Slow Stochastic is signaling market direction is down and it is extremely 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 down for stocks and is extremely overbought.
Market Direction Outlook And Strategy for Nov 18 2014
Nothing new to report today. At the close the S&P was exactly where it was on Friday and the technical indicators are virtually unchanged. Only the Fast Stochastic is slowly turning toward being a bit more neutral than down or up but right now it is still signaling down.
The market still needs a catalyst to move it higher. I do not see any catalyst at the present time.
The outlook for Tuesday then is for stocks to probably slide in the morning. try to recover over lunch but then continue to slide at the close. I am still expecting sideways with a bias lower.
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