The news of the industrial output decline by the most in 8 months, dropped the market direction down for a very short period of time. My intraday comments today covered the morning market action. By the end of the day the markets had all closed higher although the NASDAQ index was up just 9 points primarily due to the decline in Apple Stock. The belief among investors seems to be that the market will remain supported through the Fed policy throughout this year and part of the next. Inflation is so low that analysts believe the Fed can go on with the quantitative easing with no concerns for inflation. Indeed the Labor Department reported that the producer price index fell 0.7% in April from March.
In Europe the general economic outlook was another decline in GDP marking the longest recession in their history. Only Germany managed to squeak out a small 0.1 percent rise in GDP. Meanwhile Macey’s saw a two percent jump in their shares with news that first quarter profit jumped 20 percent, their dividend was increased and 1.5 billion was set aside for additional stock repurchase. As well Google stock shot past $900 for the first time in Google’s history.
Gold and Market Direction
Meanwhile gold fell $28.30 to the lowest level in a month. This seems to be at odds with what we are seeing from economic reports. On one hand many indicators seem to be pointing to a slowdown in the economy which should lead to more stimulus and higher gold prices. But gold seems to be signaling that the economy might be improving more than many economists believe, Indeed the dollar is getting stronger which often leads to the price of gold declining. Where gold is headed is probably anyone’s guess but if the dollar rises further gold is sure to fall more.
Market Direction Action
The 1 minute chart below shows today’s market direction action.
A. The opening industrial output numbers pushed market direction lower, but within 15 minutes the bottom was already in.
B. The market direction failed to fall back and with what appeared to be a bottom in place for the day the market direction moved higher.
C. The high for the day was set in by the noon hour and then the market direction pulled back.
D. Typical for this market we can see that the afternoon selling stopped with about an hour left in the day.
E. The market direction pushed back up into the close buy failed to recapture the high for the day.
Market Direction Economic News For The Week
Tomorrow we get the Weekly Initial Unemployment Insurance Claims, consumer prices, housing starts and then on Friday the leading indicators. Any of these could cause the market direction to fluctuate. In particular I am looking forward to the leading indicators on Friday.
Market Direction Closing For May 15 2013
The S&P 500 closed at 1,658.78 up 8.44 points. The Dow closed at 15,275.69 up 60.44 points. The NASDAQ closed at 3,471.62 up 9.01 points.
Market Direction Technical Indicators At The Close of May 15 2013
Let’s take a moment now and review the market direction technical indicators at the close of May 15 2013 on the S&P 500 and view the market direction outlook for May 16 2013.
For Momentum I am using the 10 period. Momentum is positive and rising again and has today shown the same readings as early last week when momentum was equally high.
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 April 26 and the signal remains valid. The signal reading yesterday was pushing higher and today the reading is also moving to higher readings.
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 continuing to stay extremely overbought.
Rate Of Change is set for a 21 period. Rate Of Change has taken quite a jump today indicating more buying today by investors. Again it is important to be aware that often this type of jump is followed by a weak downturn the following day.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is extremely overbought and is signaling that the market direction is still up but again the market direction is so overbought that the market could easily turn sideways.
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 also extremely overbought and while yesterday it was signaling up, today is is more neutral then up.
Market Direction Outlook And Strategy for May 16 2013
The market direction outlook for Thursday then is for another weak start and then a possible push to try to move still higher. The market direction move higher today was not nearly as strong as some of the prior days. The top that was put in around the noon hour was sold for most of the afternoon which is more a sign of an overbought market than a market under full steam.
Tomorrow we could see the market continue to push up but gains may be smaller and there could be weak periods. I will be looking forward to any additional Put Selling opportunities during the day.
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