Stocks have needed a catalyst for the past week to push higher. That catalyst came from McDonalds Stock today which turned out better than expected earnings and rose 8.12% which was pretty spectacular for such a large cap stock. Other stocks joined in the advance but after hours Microsoft, AT&T, Google and Amazon reported better than expected results and moved considerably higher in after hours trading. This will push stocks UP for Friday and into next week.
Market Direction Closings For Oct 22 2015
At the end of the day the indexes closed at the highs. The S&P closed at 2,052.51 up 33.57 and well above 2040. The DOW closed at 17,489.16 up 320.55 and well above 17,000. The NASDAQ closed at 4,920.05 up 79.93 and would have done even better if not for some Biotech stocks.
Market Direction Technical Indicators At The Close of Oct 22 2015
Stock Chart Comments:
SPX Market Direction Technical Analysis for Oct 22 2015
The S&P closed above the 2050 level today in a remarkable rally from below 2020.
This places the S&P above the 200 day moving average and ready to move to the next level of support at 2075.
Meanwhile the 20 day simple moving average (SMA) issued a buy signal today as it crossed up and over the 50 day moving average.
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 was 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 turned sideways after falling yesterday.
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 has lost a lot of strength in the past week but on Thursday it turned sideways, matching the outlook from the momentum indicator.
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 moved back into overbought readings..
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and now moving higher clearly signaling the market direction is up.
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 down for stocks and is still 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 isused a buy signal at the close today and is ready to move higher.
Market Direction Outlook for Oct 23 2015
Wednesday’s close below 2020 after 4 days of attempting to break the 2030 level to reach 2040 was a signal that investors were worried over the poor earnings results. Today’s earnings results were better and that was all it took for investors to jump into the market. Some of the move higher would be short covering but the majority would be buying.
We could see some weakness in the morning on Friday but in general the market is now positioned to move to 2100 shortly. Friday should see another positive close but not a rally as strong as we saw on Thursday.
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