Thursday was another great day for trading stocks. The market direction was pretty solid for the entire day which makes Put Selling and my market direction portfolio trades a lot easier. The Weekly Initial Unemployment Insurance Claims came in better than expected, dropping to 323,000 from last week’s 348,000. This helped to boost stocks today. Friday though is the more important number, but with so many economists sure that the weather is affecting the employment numbers, even a mildly bad number probably won’t affect the market trend higher.
S&P Market Direction Intraday for March 6 2014
The one minute S&P chart below shows how much steadier the market direction was today. Yesterday’s chart showed a lot of choppiness but today was a lot steadier. The morning saw a push higher at the start. The 1882 level was quickly reached and then some selling moved back to the opening high. From there a second rally attempt pushed back to 1882 and when it failed to break higher sellers stepped in and pushed the market direction all the way down to 1875 by 2:00 PM. Into the close the market rallied back to 1880 but then fell to close up 3.22 to 1877. Still considering the employment numbers on Friday, this was a good day for stocks and a decent close especially considering the heavily overbought condition.
Advance Declines For March 6 2014
The advance – decline numbers today show how choppy the action was with 55% of stocks advancing (same percentage as yesterday) and 42% declining (almost the same percentage as Wednesday) . There were 261 new highs as the market is starting to pick up steam again and there were 62 new lows, slightly more than yesterday but all the numbers still point to a continuation of the move higher.
Market Direction Closings For March 6 2014
The S&P closed at 1877.03 up 3.22. The Dow closed at 16,421.89 up 61.71. The NASDAQ closed at 4352.13 down 5.85.
The Russell 2000 ETF IWM was almost unchanged again closing down just 2 cents at $119.74.
Market Direction Technical Indicators At The Close of March 6 2014
Let’s review the market direction technical indicators at the close of March 6 2014 on the S&P 500 and view the market direction outlook for March 7 2014.
The 1750 level is holding the S&P up. The 1840 level continues to look decent although support there will still be softer than at 1750. The market continues to push higher and a lot of resistance has disappeared in the last several days.
For Momentum I am using the 10 period. Momentum has been the best indicator over the past two months, replacing MACD as the most accurate indicator. Momentum for the third day is climbing.
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 buy signal on Feb 11. MACD moved back up a bit higher again today which is positive for stocks.
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 positive and moved slightly lower today..
Rate Of Change is set for a 21 period. The rate of change is quite bullish and moving sideways after pulling back slightly yesterday.
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 Friday. It is extremely overbought.
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 further gains tomorrow for stocks and it too remains extremely overbought.
Market Direction Outlook And Strategy for March 7 2014
The unemployment numbers would have to be very bad for stocks to have a lot of trouble tomorrow. The technical indicators are strongly bullish and continue to point to further advances. Today I did quite a few trades and I am back placing more capital at risk. Two of the more interesting trades were Apple Stock where I did a put credit spread and Exxon Stock which I also did a spread on. Both of these are very short trades done against the weekly options.
Meanwhile other trades today included Procter and Gamble Stock, Johnson and Johnson and I was unable to post a Bristol-Myers stock trade which I also did today. What I am indicating through these trades is a belief that stocks are going to move higher into March and possibly April. However after April as spring gets underway I am not as convinced that stocks will move higher in the summer. The summer months tend to be harder on stocks and this year could see deeper selling than stocks saw in the summer of 2013.
But that’s several months away yet and I am continuing to look for opportunities and stay invested for the next month and a half before assessing where I think stocks might end up during the summer period. For tomorrow I am expecting the market direction to continue sideways with a bias to the upside and I don’t think the employment numbers will have a lot of effect on stocks unless they are incredibly bad.
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