The outlook for stocks for Monday Sept 15 was for the volatility we have been experiencing to continue. Investors should expect weakness to continue to dominate but also be prepared for quick rallies as the bullish investors continue to use the dips to buy and trade stocks. The US dollar pulled back a bit today but in general it is seeing the best rally since 1997 and this is applying a lot of pressure to commodity prices which in turn is keeping the Toronto Stock Exchange in the red.
Quite a number of data pieces were released today including one report out of China showing industrial production slowing in August to a level seen back in 2008 to 2009. Still though it is positive at 6.9 percent but the Chinese government may not see double-digit GDP again for a while. A slowdown in China also means a slowing of demand for commodities.
NASDAQ Down Today
Analysts are making a lot about the decline in the NASDAQ Index today but looking at the chart the index has been in a bit of a decline since setting its most recent high at the start of September. Today’s decline of about 1% has broken through the Middle Bollinger Band and sent the NASDAQ down to the Lower Bollinger Band.
Meanwhile of bigger concern technically is the Bollinger Bands Squeeze that is forming. With the NASDAQ index slowly drifting lower and then today dropping 1%, it sets up the Bollinger Bands Squeeze to push the index a lot lower. This needs to be watched.
Technically the 50 day simple moving average (SMA) is not far below and could be reached easily in just a single day of trading.
Momentum has turned negative.
MACD issued a sell signal on Friday and is confirming that sell signal today.
The Ultimate Oscillator is turning neutral to negative in its outlook.
The rate of change is rapidly falling but still positive.
Both the Slow Stochastic and Fast Stochastic are continuing with strong sell signals.
NASDAQ Index to Sept 15 2014
The direction for the NASDAQ appears to be lower for the moment and this will impact the other indexes.
S&P 500 Intraday Market Direction Chart
The one minute S&P 500 intraday chart below for today shows the same problem intraday. The S&P is trending below the Middle Bollinger Band which is essentially the 20 day simple moving average (SMA). The Bollinger Bands Squeeze is continuing to form. If the SPX continues to decline into the squeeze I will have to reassess at that time but normally this would indicate a bigger move lower is coming. I will keep the charts updated to follow the move into the Bollinger Bands Squeeze.
You can see that the SPX is moving closer to reaching the 50 day simple moving average (SMA) which is around the 1975 level in the SPX. I originally wrote that I had expected this weakness over the past couple of weeks to end around the 1975 level which it still may reach but with the Bollinger Bands Squeeze starting to form this index must be watched for signs of anything stronger building to the downside.
SPX intraday Sept 15 2014
Market Direction Outlook Into The Close For Sep 15 2014
Into the close the NASDAQ looks like it will continue to hold its losses and probably close down just over 1%. The SPX looks set to try to hold 1985 but I think we will see a negative close for the SPX as well. The Dow looks like the only index that will be positive at the close.
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