The market direction outlook for Friday was for the market to try to push for the 50 period exponential moving average (EMA) but fail and move lower. That is exactly what happened but while the market direction is still cautionary due to just 3 days of big gap opens but no volume, there are still good technical signs with Friday’s pull back to suggest the market direction is still up.
Market Direction Chart for June 28 2013
The market direction chart for Friday June 28 shows that while the move was lower, the market still failed to close on the lows for the day but instead managed to close higher than Thursday’s open. This is a good signal and one that would indicate that the market direction still has strength left to try to overcome the 50 period moving average.
Market Direction Closing For June 28 2013
The S&P 500 closed at 1,606.28 down 6.92 and the Dow closed at 14,909.60 down 114.89. The NASDAQ closed at 3,403.25 up 1.38.
Market Direction Technical Indicators At The Close of June 28 2013
Let’s review the market direction technical indicators at the close of June 28 2013 on the S&P 500 and view the market direction outlook for July 1 2013.
For Momentum I am using the 10 period. Momentum remains negative and is almost unchanged from Thursday.
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 May 24. The sell signal is still negative. On Friday the MACD reading is rising slowly with a divergence of -2.76 which while negative is a big increase from readings that were very negative earlier in the week.
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 clinging to positive readings.
Rate Of Change is set for a 21 period. The rate of change is negative for the 14th day but is moving 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 up.
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 direction is up.
Market Direction Outlook And Strategy for July 1 2013
Friday’s negative close while expected, is not concerning at this point. All eyes remain on 1600 for the S&P 500 and whether it will hold as support. It is interesting to also consider that the Dow is back below 15000. Throughout the past 5 years the Dow has had trouble with these big round numbers like 12,000 and 13,000 and now 15,000. While not overly significant themselves, for some reason the Dow has exhibited a weakness for the big round numbers since the market crash in 2008.
My outlook for Monday July 1 is for the market direction to try once more to push back beyond the 50 period moving average on low volume. On dips in my favorite stocks I am continuing to do Put Selling in reduced quantities. I believe caution remains of the utmost concern. At this point, protecting capital from loss is just as important as further gains.
The Market Direction Technical Indicators are split again, with the two stochastic indicators insisting market direction is up and the rest remaining negative. But the 50 period EMA is important to the overall health of the market direction and I think investors will try to push to retake it on Monday.
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