The market direction give-back on Friday after setting all new highs in the SPX was disappointing. While it might be understandable that investors remain nervous over everything from the Ukraine Crisis to the outlook for the Chinese economy to worries over the Fed comments on interest rates, it was somewhat surprising to see the market give back the entire rally and end in the red. Let’s take a look at Friday’s market direction intraday to start.
S&P Market Direction Intraday for March 21 2014
The morning started off with a shark move higher and within minutes the S&P had set another record high. This brought in sellers who pushed the market down but not to the opening valuations. The lack of any further pullback brought in buyers and the market turned up and almost reached the previous high. At that point selling started again. It was slowly at first but as the afternoon wore on and there was no further rally attempt, sellers took the upper hand and by 1:00 PM the selling was intensifying. Into the close the S&P made two lower lows and the market almost closed at the lows for the day.
Advance Declines For March 21 2014
All the indexes sold off on Friday but 57% of stocks advanced versus 40% that declined. 207 new highs were made which was double Thursday’s highs. 82 new lows were made which was almost the same as Thursday’s 83 new lows.
Market Direction Closings For March 21 2014
The S&P closed at 1866.52 down 5.49. The Dow closed at 16,302.77 down 28.28. The NASDAQ closed at 4276.79 down 42.50.
The Russell 2000 ETF IWM fell 55 cents to close at $118.61
Market Direction Technical Indicators At The Close of March 21 2014
Let’s review the market direction technical indicators at the close of March 21 2014 on the S&P 500 and view the market direction outlook for March 24 2014.
The 1750 level has been holding the S&P up and now the 1840 level is the first line of support. Friday’s plunge did not do a lot of technical damage but basically was pushed back down from a new all-time high. The give-back though all the way into a negative close even with triple witching, is never a good sign.
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. Momentum has not supported the present rally to a new all-time high and on Friday it turned negative 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 fell back away on Friday and remains negative on the market direction moving higher.
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 was positive on Friday despite the selling.
Rate Of Change is set for a 21 period. The rate of change is still positive but spent Friday moving sideways for the third 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 now 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 signaling that the market direction is down.
Market Direction Outlook And Strategy for March 24 2014
Technically not a lot of damage was done on Friday but giving back the gains was disappointing and shows weakness in the market direction. Momentum and MACD have both refused to support this rally. MACD has been negative since Feb 13 and issued a sell signal at that time. On Friday the technical indicators came in with 4 negative and two positive. The outlook then for Monday is for the market direction to remain weak and the possibility of further selling does have merit in the outlook.
While technically the indicators are 4 to 2 against the market direction moving higher on Monday, I won’t be surprised to see some further attempts to regain the momentum to the upside. It may just take another catalyst to get the markets moving higher and that catalyst for Monday could be China.
I have posted a few stocks that I will be watching on Monday. If there is more selling I will be placing more trades. The market direction outlook for Monday then is for more weakness and a possible negative close on the day. That won’t be nice to see technically, after making a new all-time high in the morning on Friday. A lower close on Monday will mean that the market direction new high was not confirmed and often the can lead to additional selling. Let’s see what happens during the day. I am expecting a sharp bounce attempt in the morning but weakness will prevail I believe and then the afternoon will probably see stocks try to move higher. I will do an analysis in the afternoon tomorrow.
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