The market direction outlook for Wednesday was for stocks to show some signs of being overbought. I felt they might try to retest the 50 day SMA but they should be higher by the close. This was not the case although selling was for the most part fairly controlled and without any kind of panic. The day was dominated by the Fed news. Let’s take a look at today’s action.
SPX Market Direction Intraday for Oct 29 2014
You can see in the one minute intraday chart for the SPX below, that stocks drifted lower into the Fed news as investors were waiting to hear the latest Fed news. You can see the gap down on the Fed reports but the selling was actually not very strong and into the close investors had pushed the SPX back above the low points for the day to close at 1982.30.
SPX intraday for Oct 29 2014
Advance Declines For Oct 29 2014
Volume rose to 3.77 billion shares on Wednesday with 61% of the volume being traded to the upside. However 55% of all stocks were declining and just 41% were rising.
Market Direction Closings For Oct 29 2014
The S&P closed at 1982.30 down 2.75 The Dow closed at 16,974.31 down 31.44. The NASDAQ closed at 4549.23 down 15.07.
The Russell 2000 IWM ETF pulled back a bit today by .27 cents to close at $113.90.
Market Direction Technical Indicators At The Close of Oct 29 2014
Let’s review the market direction technical indicators at the close of Oct 29 2014 on the S&P 500 and view the market direction outlook for Oct 30 2014.
Market Direction Technical Analysis for Oct 29 2014
Stock Chart Comments: The SPX sold lower in the afternoon on the Fed news but still stocks stayed above the 200 day moving average, a good sign that further rallies are in the works.
Strong Support Levels are at 1870 and 1840. Both levels are strong enough to delay the market falling. 1930 was given up yesterday. 1956 is back as support for stocks and today was tested a number of times but held the market up.
The other two support levels not shown in the chart above 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 now the bottom line.
A break of 1750 would mark a severe correction of more than 13% from the most recent high. This would be the biggest correction since April 2012. A pull-back of that size would definitely stun investors at this point and it is not something I am anticipating at this time.
Momentum: For Momentum I am using the 10 period. Momentum is still positive and rising toward being overbought.
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 October 22 which was confirmed on the 23rd. MACD is continuing to gain strength.
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 overbought.
Rate of Change: Rate Of Change is set for a 21 period. Today the rate of change is back positive and confirming the trend change to up.
Slow Stochastic: For the Slow Stochastic I use the K period of 14 and D period of 3. As the Slow Stochastic tries to predict the market direction further out than just one day. The Slow Stochastic is signaling market direction is up but is beginning to turn 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 still signaling up and it too is very overbought.
Market Direction Outlook And Strategy for Oct 30 2014
Today was all about the Federal Reserve. The report shows that the Fed may raise interest rates as soon as spring 2015. Technically stocks are still pointing to higher prices for stocks. For Thursday I am expecting a bit of a rebound rally at the outset and then some selling. I am not expecting the market to move much higher into the close but I am expecting a positive close. I am not expecting the 50 day will break on Thursday but it could be tested if selling should start.
Strategy Notes and 3 Trade Ideas For Members
For FullyInformed USA Members here are the investing strategy notes before the markets open on Oct 30 2014. These are detailed strategy discussions, trade outlooks and 12 trade ideas.
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