The market direction outlook for Tuesday Nov 18 2014 was for stocks to stay with a sideways trend and keep a bias lower. Instead stocks jumped on the news of the decision in Japan to not increase the sales tax rate and on news Germany’s ZEW institute reported that investor confidence had risen by 15 points back into positive territory.
All of this plus the knowledge that the ECB plans almost anything now to avoid a recession had investors back buying.
Advance Declines For Nov 18 2014
Volume came in at 3.4 billion, 300 million more shares than Monday. Up volume was 66% and down volume 33%. Declining issues came in at 37 while new highs jumped to 147. Yesterday I commented that this sideways action could not last much longer. Today’s advance decline ration is a signal the market will move higher.
Market Direction Closings For Nov 18 2014
New closing highs were found in the SPX and Dow.
The S&P closed at 2051.80 up 10.48. The Dow closed at 17,687.72 up 40.07. The NASDAQ closed at 4702.44 up 31.44.
Market Direction Technical Indicators At The Close of Nov 18 2014
Let’s review the market direction technical indicators at the close of Nov 18 2014 on the S&P 500 and view the market direction outlook for Nov 19 2014.
Market Direction Technical Analysis for Nov 18 2014
Stock Chart Comments: The chart tonight shows the S&P pushing further into new territory. The Bollinger Bands Squeeze continues to form but the 20 day simple moving average (SMA) is pushing still higher and with the S&P entering the squeeze above the 20 day, there is a good chance of a further push higher later this week. 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 and moved up slightly today.
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 still 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 or whether stocks can continue to move higher.
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 neutral 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 neutral as well for stocks and is also extremely overbought.
Market Direction Outlook And Strategy for Nov 19 2014
The rest of tonight’s market direction technical outlook for the S&P contains trading strategy information and a more detailed look than usual at the S&P. It has been moved to the members section. FullyInformed USA Members can login directly through this link to review the market direction outlook and investing strategy notes for Nov 19 2014 or Members can sign in to the full USA members site here. Non-members can join here or read about the benefits of being a member.
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