The outlook for Thursday for stocks was for the S&P to close positive but with weakness developing. The give back today in the rally on all the indexes was partly the rally slowing as the oversold technical environment has disappeared, the upcoming unemployment numbers on friday and the long weekend. Traders are always reluctant to hold positions over a long weekend.
Advance Decline Numbers for Sep 3 2015
Volume today came in at 3.5 billion and 70% of the volume was trading to the upside by the close despite the market giving back pretty well the entire day’s rally. New lows came in at just 30 and new highs at only 8. All in all, the numbers are not overly bearish.
Market Direction Technical Indicators At The Close of Sep 3 2015
Let’s review the market direction technical indicators at the close of Sep 3 2015 on the S&P 500 and view the market direction outlook for Sep 4 2015.
SPX market direction technical indicator for Sept 3 2015
Stock Chart Comments:
For the S&P the give back of today’s rally has placed the 50 day right near the 200 day moving average. The 100 day is starting to take the lead for the market which is a sell signal. If the 50 crosses the 200 day it will be a major sell signal.
The 1956 level was reached today but the market closed just below it.
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 was more important than 1970 for the market. 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.
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 strongly negative. Readings are still the worst this year and the worst since the fall of 2011.
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 Aug 19. That sell signal remains strong today and is why protection should continue to be considered.
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 back negative after taking a big turn lower.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal remains negative but trying to climb back. The rate of change is strongly negative and moving sideways.
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 but an up day could see a buy signal generated.
Market Direction Outlook for Sep 4 2015
The technical indicators really did not change a great deal from yesterday. They are overwhelmingly negative. The give back rally today looks to be setting the market up for a pullback on Friday ahead of the long weekend. As well with investors nervous on the jobs numbers, they took to the sidelines on Thursday.
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