Friday was a half day for the markets so volume was poor at 1.4 billion shares traded. While we cannot read much into the advance decline numbers for Friday it is interesting to note that new highs were at 70 and new lows were 48. This does support the momentum outlook which is slowing creeping higher.
The big news on Friday came from Disney which fell on news that 3 million subscribers have left ESPN which is continuing to experience declines in viewers. The other news on Friday were rumors that holiday shopping over Black Friday was lighter than expected, though Target reported strong turn outs. Personally many friends advised me they found fewer deals this year which they believe points to retailers not being as concerned about sales as in prior years, hence price cutting possibly was not as deep. If this is the case and it was not a matter of consumers being nervous about opening their wallets, then it points to the economy recovering further and not the start of a decline in consumer spending. We will know more about Black Friday sales later this week.
Market Direction Technical Indicators At The Close of Nov 27 2015
SPX Market Direction Technical Analysis for Nov 27 2015
Stock Chart Comments:
The S&P close on Friday virtually unchanged from Monday. It has been a sideways week for the indexes. The index is still trading above all major moving averages and the 20 day.
The 100 day moving average has now moved above the 200 day on very weak volume on Friday. This is a strong up signal but it needs confirmation. Meanwhile the 50 day moving average despite turning up, has a long way to go before regaining the lead in market direction.
The Lower Bollinger Band is still moving above the 50 day moving average and is nearing the 100 and 200 day moving average which is a bearish signal. At the same time a Bollinger Bands Squeeze is now underway which looks poised to send stock either up or down as the signal is unclear.
The closing candlestick on Friday was again bearish. However with such low volume I would not read much into the closing candlestick from Wednesday or Friday.
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 positive 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 at negative 0.99 or virtually flat. Any move higher on Monday and this will become a buy 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 rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is neutral to negative. Essentially it is flat.
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 both signal lines are now flat and we could get a down signal should the market slip on Monday.
Market Direction Outlook for Nov 30 2015
For Monday I am expecting a bounce higher at the open and then weakness. Technically there are far more signals to the upside than down. For the final day of November we could see the market slip slightly but stay sideways. Tuesday though I am expecting a jump higher. Therefore we could see movement in the afternoon on Monday that will push stocks higher into the close and set the market up for a move above 2100 on Tuesday.
The bias remains to the upside for stocks presently.
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