Once again stocks moved lower but with far less conviction this time. A preliminary China manufacturing gauge was reported as falling to a six-year low which assisted in the negative sentiment. The biggest culprit though was oil which again moved lower falling 4.1 percent for November contracts. This leaves West Texas Intermediate Crude at $44.48 a barrel. Stocks were also on edge as investors wait for another speech from Janet Yellen on Thursday.
Market Direction Closings For Sep 23 2015
All the markets closed well off their lows today. The S&P closed at 1938.76 down 3.98 and below the 1940 support level. The DOW closed at 16,279.89 down 50.58 and the NASDAQ closed at 4752.73 down 3.98.
Advance Decline Numbers for Sep 23 2015
Volume today came in at 3.1 billion shares with the Jewish holiday of Yom Kippur. 70% of all volume was to the downside and new lows rose to 234 on Thursday. New highs were at 8. These are bearish numbers but the markets held their ground fairly well considering the 80% selling volume.
Market Direction Technical Indicators At The Close of Sep 23 2015
Let’s review the market direction technical indicators at the close of Sep 23 2015 on the S&P 500 and view the market direction outlook for Sep 24 2015.
Stock Chart Comments:
Market Direction Technical Analysis for Sep 23 2015
The moving averages are continuing their decline with the 200 day now on top followed by the 100 and 50 day moving averages. This is bearish for stocks.
The 20 day simple moving average (SMA) is trying to turn back up.
The closing candlestick on Wednesday is a doji-cross which often signals a move lower. The S&P closed below 1940 today but was well off the lows of the 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 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 and 1900 have very little if any 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: 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 Sep 10. Today the buy signal lost more strength but remains positive.
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 and still falling toward being oversold.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is now positive and quickly rising. This usually signals a change in trend to 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.
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.
Market Direction Outlook for Sep 24 2015
Tonight the technical indicators are 4 negative and 2 positive. The interesting thing is the rate of change which is rapidly rising. This almost always signals a change in trend is coming.
For Thursday Sep 24 I am looking for more weakness but it could be a toss-up whether stocks can fall much further on Thursday. The lack of selling interest is starting to show. Stocks could actually close positive on Thursday if most of the sellers have tired.
Caution is warranted still as the technical indicators are signaling more downside ahead but there are some signs that a rebound rally may be in the works as well. Tomorrow then, I am expecting a mixed day.
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