The technical indicators for Thursday’s market direction outlook was for stocks to drift sideways with an equal chance to up or down. My personal outlook was that Yellen’s comments would be forgotten and the market would move higher. The one thing that surprised me about investors was how few picked up on her comment that the Fed would remain very accommodating. I did not see that mentioned on any article I read yesterday or today and I think that is important. Meanwhile today the S&P moved to within 10 points of the all-time high, the Dow is within 234 points, the NASDAQ within about 52 and the Russell 2000 is less than 1.50 points away. Pretty impressive overall and with still one more month of the best six months of the year left (April) I think we will see new highs before a serious correction brings out the bears again.
The Weekly Initial Unemployment Insurance Claims were released before the market opened and they showed a slight rise in number from 315,000 last week to 320,000 this week. Still these are solid numbers and I wrote an article discussing their signals for investors.
S&P Market Direction Intraday for March 20 2014
The morning started off as expected with a bit of selling. Within a few minutes stocks had set up a morning low and then pushed up with just a quick dip back around 10:00 AM. When that held investors kept buying reaching the 1858 level where repeated attempts failed to push higher. This led to some light selling which saw another pullback. Once the late morning pullback held, investors once again bought and pushed the S&P to 1874. Unable to break through stocks turned sideways until late in the day when they dip as the close arrived. At the end of the day a quick bounce pushed the S&P to close at 1872.01. The entire decline from the Yellen comments yesterday was erased and the market was sitting within striking distance of a new high once again.
Advance Declines For March 20 2014
Despite the big up day only 48% of stocks advanced and 49% declined. There were just 102 new highs and 83 new lows. These numbers show the day was more evenly split than the market movement would suggest.
Market Direction Closings For March 20 2014
The S&P closed at 1872.01 up 11.24. The Dow closed at 16,331.05 up 108.88. The NASDAQ closed at 4319.29 up 11.68.
The Russell 2000 ETF IWM rose just 16 cents to $119.16 but is within striking distance of its all-time high of $120.58.
Market Direction Technical Indicators At The Close of March 20 2014
Let’s review the market direction technical indicators at the close of March 20 2014 on the S&P 500 and view the market direction outlook for March 21 2014.
The 1750 level has been holding the S&P up and now the 1840 level is the first line of support. You can see that the Plunge yesterday is all but gone as the stocks reclaimed the lost valuations from Yellen’s comments. 1840 is building stronger support daily now.
For Momentum I am using the 10 period. Momentum has been the best indicator over the past three months, replacing MACD as the most accurate indicator. While momentum continues to not support this rally it has turned back up and is nearing positive again.
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 Feb 13. MACD is back rising again today although it is still negative.
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 positive today and climbing which is a good sign for stocks over the next couple of days.
Rate Of Change is set for a 21 period. The rate of change is still positive but spent the day sitting sideways for the second day.
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 still 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 signaling that the market direction is also still up.
Market Direction Outlook And Strategy for March 21 2014
Momentum is turning back up but not yet positive and MACD is following suit but also not yet positive. This is unfortunate and shows the nervousness of investors. The same is true for the Rate Of Change indicator which is positive but is trending sideways reflecting the lack of buying interest among investors. Meanwhile the two stochastic indicators are pointing to another up day for Friday along with the Ultimate Oscillator. That means 3 indicators are pointing up, one is sideways and two are negative but climbing.
Tomorrow we will probably see some selling in the morning near the open which is fast becoming the normal opening for stocks. From there I am expecting market direction to continue to push higher but not as high as today. Tomorrow is options expiry for March and I have a lot of options expiring. It is almost always a somewhat volatile trading session so I won’t be too surprised to see the market direction choppy. The direction though is still higher for stocks and I am still investing when trade opportunities appear.
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