Analysts complained on Thursday that the market was on hold ahead of Friday’s unemployment numbers and this accounted for the see-saw day. I’m not so sure. I have expected some weakness in the morning but not a 200 plus drop in the Dow. The afternoon was basically flat once the indexes had recovered some of the lost ground and then into the close stocks rose again until the last half hour when stocks shot higher, obviously thanks again to computer programs. It would be interesting to see the algorithms they use that tell them what points to be buying and selling.
The Weekly Initial Unemployment Insurance Claims came in slightly higher than expected at 277,000 and that seemed to damage the opening a bit. Remember that around 300,000 we can expect trouble with any rally.
Tomorrow is the big news, the unemployment number. If the number is anywhere decent we should see stocks move up, particularly as China’s market is closed until Oct 8 for National Golden Week. With China’s market closed investor attention won’t be focused on the continual numbers out of China that point to a very large slowdown in progress.
While tomorrow is basically hinging on the unemployment numbers let’s still take a quick look at the markets today.
Market Direction Closings For Oct 1 2015
Markets closed near their highs again today. The S&P closed at 1923.82 up 3.79 and still above the 1920 light support level. The DOW closed at 16,272.01 down 12.69. The NASDAQ closed at 4627.08 up 6.92.
Advance Decline Numbers for Oct 1 2015
Volume on Thursday came in at 3.9 billion and of that volume 53% was moving higher and 43% lower. New lows were down again today, falling to 174. All week the new lows have been dropping off, a possible sign of a rally still to come. New highs on New York were just 10.
Market Direction Technical Indicators At The Close of Oct 1 2015
Let’s review the market direction technical indicators at the close of Oct 1 2015 on the S&P 500 and view the market direction outlook for Oct 2 2015.
Stock Chart Comments:
SPX Market Direction Technical Analysis for Oct 1 2015
A couple of things to point out tonight. First is that the Bollinger Bands Squeeze is starting to end. Second is the 50 day is falling below the Upper Bollinger Band signaling more weakness ahead. The 20 day simple moving average (SMA) is also falling but not as rapidly. Third is the pattern for the past three days which shows the S&P has been climbing each day, something it has not done since the collapse on August 24 and 25. The closing candlestick today is bearish.
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.
2075 was light support. Below that was 2050 which is also was light support. Stronger support was 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.
Weak support was at 1970 while stronger support was at 1956 and technically it is more important than 1970 for the market. 1940 was 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 but is 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 Sep 28. Today the sell signal weakened further but remains in effect.
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 negative but rose again today.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is back rising and turned positive.
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 pointing 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 pointing up for stocks but turned sideways at the end of the day signaling investor indecision.
Market Direction Outlook for Oct 2 2015
Overall the technical indicators are starting to improve but there is not a lot that can be said for market direction except it comes down to the jobs numbers on Friday. If there were no job numbers I would say Friday would be lower but not by much. Unfortunately though the unemployment report takes center stage and the technical indicators don’t have a lot of sway on Friday.
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