Today’s market was held back by consolidation as well as a somewhat startling report on oil stockpiles that showed the US has the highest inventories for this time of year since 1930. United Health Group released a profit warning report that seemed to indicate the entire healthcare sector could be in for lower profits. At one point United Health Group Stock was down 7%. It closed the day down 5.65% but the health care sector itself was an immediate drag on the indexes.
Advance Decline Numbers
Volume was lower again on Thursday with just 3.6 billion shares traded.
Of that volume 54% was to the downside. New lows though fell back from 134 on Wednesday to 86 today. New highs were pretty well unchanged at 48.
The NASDAQ saw up volume improve with 54% of all volume being traded to the upside. Volume reached a respectable 1.7 billion shares. New lows fell from 168 on Wednesday to 101 on Thursday. New highs were almost unchanged at 66.
The advance decline numbers show a market stuck sideways at present but that should change on Friday.
Market Direction Closings
The S&P closed at 2,081.24 down slightly by 2.34. The DOW closed at 17,732.75 down just 4.41. The NASDAQ closed at 5073.64 down just 1.56.
Market Direction Technical Indicators At The Close of Nov 19 2015
SPX Market Direction Technical Analysis for Nov 19 2015
Stock Chart Comments:
The S&P closed on Thursday still above all three major moving averages and the 20 day simple moving average (SMA).
The 100 day moving average is back pushing to the 200 day and almost ready to overtake it. Meanwhile The Lower Bollinger Band is still moving above the 50 day moving average which is a bearish signal and at the same time the Bollinger Bands look like they may be starting to form a Bollinger Bands Squeeze. This needs to be watched.
As well the closing candlestick was a doji-cross which at the top of a rally often signals a downturn over the next day or two for stocks.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 was 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 rising.
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. That sell signal is weakening.
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 back positive and rising higher.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and climbing higher as it signals that stocks will move higher shortly.
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 up 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 also signaling higher for stocks but you can see in the chart that while the signal is still bullish, the %K signal line has turned considerably lower.
Market Direction Outlook for Nov 20 2015
The drop in volume was disappointing to see happen today. Technically, the indicators are evenly split with 3 pointing higher and 3 still negative although they are up from their lows as well. The closing candlestick is also of minor concern for stocks for Friday.
The outlook for Friday would appear positive with stocks set to move still higher. The closing candlestick though could signal stocks will head lower on Friday or certainly contain some weakness, so this should also be taken into account when trading on Friday.
The sideways action today was primarily the result of profiting-taking and consolidation among investors.
The trend up remains intact as the outlook is back to up for Friday.
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