The market direction outlook for Thursday was for more downside which is what investors ended up seeing but it could have been worse and indeed the last hour saw the indexes fight back and close off their lows for the day. The US GDP numbers came out and they were decent coming in at an annualized rate of 2.6%. Not bad considering how many analysts have been predicting 1% annual growth for the past 3 years. Consumer spending showed improvement and in fact was at the highest level in about three years.
Weekly Initial Unemployment Insurance Claims
The Weekly Initial Unemployment Insurance Claims came in at 311,000 which is down again from the last two weeks.
Home Sales Lower
But despite the increase in consumer spending, the number of buyers of new homes fell for the eighth straight month and the talk about rising interest rates is not helping home sales.
S&P Market Direction Intraday for March 27 2014
The opening of the markets today saw an immediate plunge to what ended up being the low of the day. The S&P within minutes was down to 1842.23 and it sliced through support at 1850. A rally recovered that early morning loss but stalled out at just below 1856 and unable to push higher the market started to drift lower again. By noon the S&P was just 1 point higher than the early morning low as it traded at 1843.29. Stocks seemed to make a double bottom here and investors were back buying pushing the index to a third high which was actually lower than the previous two highs. Still, the market failed to break back below 1845 but unfortunately it could not break through to 1850, despite a solid attempt in the last hour. The market closed at 1849.04 just below 1850.
Advance Declines For March 27 2014
Advancing issues managed to pull ahead of declining ones but just barely. 52% of stocks advanced on Thursday and 45% declined but new lows outpaced new highs with 84 new lows and 62 new highs. We need to watch the number of new lows now. If the number of new lows starts to building momentum, even with a sideways move in the index, it will signal a chance in trend to down.
Market Direction Closings For March 27 2014
The S&P closed at 1849.04 down 3.52. The Dow closed at 16,264.23 down 4.76 but during the day it easily broke through the 16200 level. The NASDAQ closed at 4151.23 down 22.35.
The Russell 2000 ETF IWM fell 129 cents today for a quarter of a percent loss, closing at 114.40
Market Direction Technical Indicators At The Close of March 27 2014
Let’s review the market direction technical indicators at the close of March 27 2014 on the S&P 500 and view the market direction outlook for March 28 2014.
The 1750 level has been holding the S&P up and now the 1840 level is the first line of support. 1850 has been starting to build some support but today the market easily and quickly fell below that level and closed below it.
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 today it is neutral which considering it has been lower for a number of days now, might be considered a good sign.
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 moved lower.
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 turned negative Tuesday and today it fell further and is now oversold.
Rate Of Change is set for a 21 period. The rate of change is still positive but just barely. Yesterday the Rate Of Change was turning back up signaling buying interest among investors. Today the Rate Of Change slipped into negative 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 will be lower.
Market Direction Outlook And Strategy for March 28 2014
Almost all the technical indicators are now pointing to down. With two indicators neutral and 4 indicators negative, the outlook for Friday is definitely lower. With 1850 broken the next level stocks may test is 1840. It looked for a time this morning that 1840 was going to be tested on Thursday morning.
I did a number of rolls of naked puts today including rolling YUM Stock puts forward and Aflac Stock puts forward. If the market direction fails to recover I will be rolling a lot more naked puts in coming weeks.
The outlook for Friday is for stocks to continue to move lower. I am still looking for opportunities in my favorite stocks and will take advantage of any as they appear. For tomorrow the outlook remains weak and lower for the indexes. We could see a technical bounce following so much selling but right now any technical bounce looks like it will be short-lived.
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