Friday Oct 2 saw markets sell-off in the face of a lower than expected jobs report. Many investors took the report to confirm that a global slowdown was making its way to the shore of America. That started the selling in the morning which saw a dramatic plunge and volume at over 88% to the downside. By the afternoon the mood had changed as analysts discussed the likelihood that these jobs numbers would affect any possible interest rate hike. To analysts it meant no rate hike in December and perhaps none until early 2016. This seemed to be the consensus as by the close markets were up big with a 200 point gain on the Dow, 27 point on the S&P and 80 point on the NASDAQ. Happy Days no doubt. The problem though could be declining revenue in the upcoming quarter.
Market Direction Closings For Oct 2 2015
Markets closed at their highs on Friday. The S&P closed at 1951.36 up 27.57 and almost to the 1956 support level. The DOW closed at 16,472.37 up 200.36. The NASDAQ closed at 4707.77 up 80.69.
Advance Decline Numbers for Oct 2 2015
Volume on Friday rose to 4.3 billion with new lows rising for the first time in the week to 268. New highs were up slightly at 12. Volume in the morning was decidedly negative but for the afternoon volume switched to the positive side. Neither the bears or bulls won out on Friday.
Market Direction Technical Indicators At The Close of Oct 2 2015
SPX Market Direction Technical Analysis for Oct 2 2015
Stock Chart Comments:
The closing candlestick on Friday was actually a bit bearish despite the steep rise in the afternoon. All the moving averages are unchanged but the index finally reached the 20 day simple moving average (SMA) on Friday and is within striking distance of the 1956 support level. This though might prove more difficult that anticipated as 1956 is resistance now as is 1970 just a few points higher. The 200 day continues to lead the market followed by the 100 day and then the 50 day.
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 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 buy signal on Friday Oct 2. That signal has to be confirmed.
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 back rising but turned sideways which could signal the resistance that lies ahead.
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.
Market Direction Outlook for Oct 5 2015
For Monday Oct 5 the technical indicators look better. 5 are now positive although one of the five is sideways and one needs confirmation. Only one indicator is bearish and it is rising. The buy signal was good to see from MACD at the close however Monday may prove more difficult for a lot of upside action. Technically the indicators are weak. The closing candlestick usually is followed by some selling in the morning. I am expecting that to be the case and then a push for a somewhat higher close. I will be posting during the day on Monday about the market direction.
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