Friday’s market outlook was all about the nonfarm payroll numbers. The numbers were good showing wage gains and a further decline in the non-participation rate. As well over 85% of the jobs created were in the private sector not public. Stocks shot up at the open and then stocks sold off in the early morning but then spent the rest of the day recovering from the sell-off to basically close up slightly or in the case of the S&P with very a very small loss..
Market Direction Closings
At the end of the day the indexes closed near their highs. The S&P closed at 2,099.20 down 0.73. The DOW closed at 17,910.33 up 46.90. The NASDAQ closed at 5,147.12 up 19.38.
Market Direction Technical Indicators At The Close of Nov 6 2015
SPX Market Direction Technical Analysis for Nov 6 2015
Stock Chart Comments:
The S&P closed within inches of 2100 and above the 200 day moving average. The 20 day simple moving average (SMA) is continuing to rise above the 200 day moving average. The 100 day is starting to move higher and could cross the 200 day early this week. This would be another up signal. The 50 day moving average is also turning higher.
The Bollinger Bands are moving higher as well following the market direction up.
However technically the indicators are not as excited about Friday’s action as the numbers lead us to believe.
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 positive and continued to fall on Friday.
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 Friday Oct 2. That signal continued to lose strength on Friday.
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 back climbing.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and was falling again on Friday. At a reading of 4.26 it is still quite bullish for stocks.
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 overbought and 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 and is also overbought.
Market Direction Outlook for Nov 9 2015
Friday’s rally back from the early morning sell-off was impressive but the technical indicators, by and large, were not impressed. Momentum, MACD and rate of change all moved lower although they are still positive. The two stochastic signals though are both pointing down for stocks.
This leaves us with 4 indicators that are still positive and 2 that are negative. Of the 4 positive indicators 3 were falling and only 1, the Ultimate Oscillator was climbing.
Monday then should see some positive moves but there will be weakness and we could definitely see some selling at points if the two stochastic indicators are correct in their outlook.
Overall though while Monday could see some weakness the outlook still appears more bullish than bearish for stocks for the start of this week.
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