The market direction outlook Tuesday was for the market direction to remain weak, trend primarily sideways but stay with an upward bias. Pretty well all of that happened today. Let’s take a look as investors continue to remain nervous about the market direction. Overall January has been disappointing but there is still time left for January to turn positive. However with the way the year has started, stocks look like they will have a tough year in 2014.
Market Direction S&P 500 Intraday For Jan 21 2014
Below is the 1 minute chart from today’s S&P 500. The early morning saw a short rally which took the index to 1849.31. From there the rest of the morning saw the index fall back to 1840 and trend along it. When 1840 broke the market dropped until it made a second low of 1832.38 around the noon hour. From there the market rallied back and broke through 1840 in the afternoon. It did not sell-off into the close which may prove positive for tomorrow but it also did not close convincingly above 1840 which has been stiff resistance.
Advance Declines For Jan 21 2014
Declining issues lost out to advancers with 34% declining and 63% advancing. There were also 245 new highs and 86 new lows. The new highs is well above the 200 issues and could be the start of a move higher. Throughout January the advance decline ratio has strongly favored higher prices for stocks.
Market Direction Closings For Jan 21 2014
The S&P closed at 1843.80 up 5.10. The Dow closed at 16,414.44 down 44.12. The NASDAQ closed at 4225.76 up 28.18.
The IWM ETF closed at $116.62 up .69 cents but it made another new all-time intraday high at 116.87. This is a good sign for higher prices for stocks.
Market Direction Technical Indicators At The Close of Jan 21 2014
Let’s review the market direction technical indicators at the close of Jan 21 2014 on the S&P 500 and view the market direction outlook for Jan 22 2014.
The most important support line in the S&P 500 is still at 1750. That support line is holding the market direction up at present and that has not changed. The second support level of 1780 is light support followed by third band of even lighter support at 1800. There is a growing band of support developing for the market at the 1825 level. Resistance remains at 1840 which the S&P closed above today.
For Momentum I am using the 10 period. Momentum has been the best indicator over the past two months, replacing MACD as the most accurate indicator. Momentum is still positive and up slightly from Friday.
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 Jan 8 2014 which was confirmed on Jan 9. MACD is still signaling sell.
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 still positive and moving higher.
Rate Of Change is set for a 21 period. The Rate Of Change is positive for the 21st day and after is now trending sideways again. For 21 days the Rate Of Change has signaled that investors are still interested in stocks and there is enough buying to continue to hold the market up at present but not enough to push it a lot higher.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is signaling that the market direction is down.
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 indicating that the market will move lower on Wednesday.
Market Direction Outlook And Strategy for Jan 22 2014
The sideways action of stocks continues. Today saw the NASDAQ and S&P move higher despite weakness and selling in the morning, but the Dow which was down below 100 points in the morning did not close higher. Despite all of this the technical indicators are still mixed.
Today at the close there are three indicators that are pointing to lower prices for Wednesday and later in the week and three that are pointing to higher prices. We are back to a mixed market. There is not enough pessimism to fall a lot lower yet and not enough enthusiasm to push a lot higher.
As I have indicated prior to today, the market direction will not keep moving at this pace. It must get a catalyst to move up or it will correct lower. For Wednesday the market direction technical indicators are split which points us back to a sideways market although this time there is no bias up or down.
My personal outlook is stocks want to move higher and have enough investor interest to do so, but lack conviction to push much higher. For tomorrow then I think we will have another sideways day with some weakness but with a bias slightly to the upside based on the IWM setting another new record and the advance decline ratio being tilted towards advancers.
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