Market Direction sometimes is easy to forecast. On Friday the closing market timing indicators are all positive and all pointing to a higher market on Monday. On Sunday the Greeks voted in a pro-austerity political party and obviously they want to try to stay within the Euro. Investors on Friday bought back into stocks and I would have to think Monday will be much of the same.
Let’s get right to the market timing technicals at Friday’s close to view Monday’s market direction outlook.
Market Direction Outlook From Market Timing Indicators
All the market timing indicators are positive giving a clear signal that market direction is back up.
Momentum has swung way up and is now at 105.07.
MACD (Moving Average Convergence / Divergence) is now at 5.37 and has not wavered since going positive June 7 and signalling market direction back up.
The Ultimate Oscillator is continuing to climb but is not near overbought readings as of yet so the ultimate oscillator shows more room to climb ahead.
Rate Of Change at 5.06 is back positive and climbing.
The Slow Stochastic is very positive and now deep into overbought territory. It also has a reading of %K 86.68 and %D 79.89. These readings are close enough that they are indicating the market may have trouble climbing from here. Market Direction will climb but slow stochastic is flashing that the climb may be slower and more difficult than the past couple of sessions
The Fast Stochastic is extremely overbought with a reading of %K 99.37. With %D at 75.43 there is still room for the S&P market direction to climb higher from here. But the overbought reading is extreme and just like the slow stochastic, the warning is that the move higher may be more muted than the past few trading sessions.
Market timing indicators from Friday June 12 2012 close shows market direction remains up
Market Direction See-Saw Is Ended
The market direction see-saw is ended and the move is now back up. With the Greek elections over and the G20 meeting on Monday and Tuesday, the market is anticipating that money will flow into the economies to keep them away from recessionary leanings. Stocks and commodities love the pumping in of more money.
The slow stochastic and fast stochastic are advising that the market direction push higher from here should be strong, but it could be a tougher move than in the past few trading sessions.
For deep in the money covered calls I will be buying to close and rolling further out and up perhaps a strike or so. I believe the markets will get a bounce here and probably break the 50 day moving average. Whether they can recover the most recent high is anyone’s guess at this point but I would believe they have a good chance. If they do, it will be one summer when selling in May and buying in June was the better strategy.
With market direction back up I will be using any weakness in either the market direction or my favorite stocks to sell puts.