The market direction on Tuesday was for stocks to rally at the open, fall back into the late morning and then rally into the afternoon but then lower into the close. I came close with my prediction, except the rally in the afternoon was stronger than expected brought about primarily by two factors. The first was the consumer confidence numbers which I wrote about in a separate article and the second was comments by Philadelphia Fed President Charles Plosser who commented that interest rates wouldn’t hit 4% until the end of 2016. Investors took that to mean stocks still have room to run before interest rates takes the wind out of further rallies.
S&P Market Direction Intraday for March 25 2014
The opening today saw the market jump on the consumer confidence numbers and by 10:30 the high for the day was in at 1871.87. From there the S&P declined all the way back to 1855.96 during the lunch hour. The early afternoon saw a second rally as Plosser’s comments circulated. The S&P moved to the 1868 level and drifted sideways. The close saw a small amount of selling but nothing of any consequence and the S&P ended at 1865.62.
Advance Declines For March 25 2014
Today’s advance decline numbers were fairly split with advancers slightly ahead. 57% of stocks advanced with 40% declined. There were 100 new highs today and 77 new lows. There is not much to read into these numbers. It was a fairly lackluster day except for the comments from the Plosser to help push stocks back up.
Market Direction Closings For March 25 2014
The S&P closed at 1865.62 up 8.18. The Dow closed at 16,367.88 up 91.19. The NASDAQ closed at 4234.27 up 7.88.
The Russell 2000 ETF IWM fell just 2 cents today closing at $116.93
Market Direction Technical Indicators At The Close of March 25 2014
Let’s review the market direction technical indicators at the close of March 25 2014 on the S&P 500 and view the market direction outlook for March 26 2014.
The 1750 level has been holding the S&P up and now the 1840 level is the first line of support. Yesterday saw investors test the 1850 level and today the 1855 level. Stocks are moving in the right direction, up. It is interesting to look at chart above and realize that basically the S&P is moving sideways with a slight bias to the upside for t5 of the last 7 days. Yesterday was the first actual break from that pattern but today reaffirmed the sideways with a bias up pattern. This bias up is very slight but it remains there.
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 continues to stay negative today although it did move higher than yesterday’s reading.
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 continues to stay negative and today it turned sideways.
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 has fallen back and today turned negative.
Rate Of Change is set for a 21 period. The rate of change is still positive and turned sideways today as it clings to positive territory.
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 again for tomorrow..
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 tomorrow could be a neutral day.
Market Direction Outlook And Strategy for March 26 2014
Technically the market direction is till weighted to the downside with 4 indicators negative and 1 positive and 1 neutral. Still though the numbers do not point to any major downturn. There is a lot of movement within certain sectors though as larger investors are rotating in and out of stocks. The NASDAQ is reflecting that change as is the Russell 2000. This could be a signal that stocks will shortly move higher. The Rate Of Change is almost neutral in its outlook but still points to some buying going on.
My personal outlook is to continue to stay invested. I see nothing that tells me a collapse in imminent and certainly there are signs that the market wants to move higher. My strategies are unchanged and I am continuing to move into more positions. I received a lot of emails today on Nike Stock and spent most of the day working with investors on that strategy and on a new trade using the Building Wealth strategy which I will post tomorrow as well. I will write-up my ongoing strategy for Nike tomorrow. The stock is very oversold and fell 1.62% into the close yesterday. This is a great company and I am not concerned. I will be rolling my existing position forward shortly and adding more puts per the original strategy. I will go over the Nike trade tomorrow.
Meanwhile for market direction tomorrow I won’t be surprised to see the market sell slightly lower at the open. Overall though the outlook is still sideways with a bias lower for tomorrow due to the 4 technical indicators pointing to weakness tomorrow.
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