The market direction outlook for Monday was for stocks to continue their push higher but I mentioned that these big numbers being faced by all 3 indexes could pose a bit of a problem. The overall movement of stocks was poor today although the first 15 or 20 minutes was certainly exciting. The NASDAQ punched through 4000 in the early going which marked a high not seen since Sept 2000, 13 years ago. A growing number of investors believe that stocks will move sideways or correct slightly going into the Christmas period and then have a short rally between Christmas and into the New Year which times the Santa Claus rally perfectly.
Personally I don’t think things ever work out so easily.
Thanksgiving Week
The history behind the shortened Thanksgiving week is pretty bullish overall. According to the Stock Traders Almanac, in the last 36 years, the Wednesday before Thanksgiving and Friday after have had excellent moves higher. In only 2 years has this not been the case. While 1987 saw losses totalling 6.6% during the Thanksgiving period, since 1988 the Dow gained 14 out of 23 times. One of the better strategies seems to be staying in the market from Wednesday to the next Friday and exiting on the Friday.
Debt Ceiling – The Sequel Coming Soon
It also won’t be long before we hear once more about the debt ceiling. The nervousness should start again any time in mid December and extend into the new year. A lot of investors think this will stop the present rally.
UBS Is Buying Stocks Still
Finally there was this news today that Alexander Friedman, global chief investment officer for UBS wealth management wrote that investors need not fear that the market is in the midst of a dangerous bubble in risk assets, because that is not the case. He believes that earnings growth will drive price appreciation but he warned that returns of 15 % a year which investors have enjoyed since the 2008 to 2009 bear market ended will not be repeated going forward. He predicted returns of 7 to 8 percent annually starting in 2014. Personally I don’t know how anyone can predict this with any degree of certainty.
Market Direction S&P 500 Intraday For Nov 25 2013
The 1 minute market direction chart for the S&P 500 below shows how the day progressed. In the morning there was a bit of selling and I did two trades, The first where I marked A, was a Trading For Pennies Strategy trade on IWM. The second was at point B where I did a SPY Call options trade using the same strategy as the IWM trades. Meanwhile I followed the S&P 500 e-minis futures today to see if the Trading For Pennies Strategy could be applied to it. I will write it up shortly. Both the IWM and SPY Call trades were posted to twitter as I did them.
The rest of the day saw the market direction trend sideways but without any movement to the upside investors decided to sell into the close. The market touches 1800.58 but still closed above 1800.
Advance Declines For Nov 25 2013
Declining issues outpaced advancing issues today with 54% declining versus 43% advancing but there were 264 new highs and 125 new lows so the mood overall remains bullish.
Market Direction Closing For Nov 25 2013
The S&P 500 closed at 1,802.48 down 2.28. The Dow closed at 16,072.54 up 7.77. The NASDAQ closed at 3,994.57 up 2.92.
The IWM ETF closed at $111.99 after making yet another new high at $112.28.
Market Direction Technical Indicators At The Close of Nov 25 2013
Let’s review the market direction technical indicators at the close of Nov 25 2013 on the S&P 500 and view the market direction outlook for Nov 26 2013.
The most important support line in the S&P 500 at this time in the ongoing rally remains 1750. That support line is holding the market direction up at present.
For Momentum I am using the 10 period. Momentum is still positive but slightly lower.
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 weak buy signal on Nov 22 and that buy signal was given a very weak confirmation today. I would not read much into the present signals but instead look as these MACD signals as advising that the market direction is having trouble here and is more sideways than up.
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 flat today but positive..
Rate Of Change is set for a 21 period. The Rate Of Change is positive and moved sideways from 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 and 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 that the market direction is up and it is extremely overbought.
Market Direction Outlook And Strategy for Nov 26 2013
The market direction technical indicators are all in agreement that the market direction is up for Tuesday although MACD is a bit of a concern as it is signaling that the market direction is having some trouble here. This though is to be expected with all three indexes bouncing up against round numbers that concern investors in general.
Meanwhile with a lot of investors beginning to believe that the rally is running out of steam it will be interesting to see if volume picks up next week which should be a sign that the window dressing I wrote about last week, is coming to a close as the institutional investors begin unloading many stocks.
Market Direction Portfolio
For FullyInformed Members who follow my market direction portfolio I was stopped out of some of my shares late in the day when the Dow plunged back. I am still holding shares though but I did adjust my stop. Members following this portfolio should check out the latest market direction trades through this link.
HP Stock (HPQ)
Hewlett-Packard stock has had a nice run up since October 8 when the stock was down around $20.25 reaching a high of $26.49 just recently, marking a gain of 30.7%. While an incredible run-up the stock is still exhibiting bear patterns and failed to break the high of $27.30 from August 13. Earnings are released on Tuesday Nov 26 and if they are weak, look for the stock to fall off. I will be watching for any Put Selling opportunities should the stock really tank on the revenue and earnings for the last quarter.
Outlook For Tuesday
The market direction remains up and the bullishness of the Thanksgiving period has not yet traditional hit stocks. This could propel the markets away from these “big round numbers” I have been talking about and see stocks push higher into the start of December.
For tomorrow then I am expecting a higher close than today.
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)
Market Direction External Links
Market Direction IWM ETF Russell 2000 Fund Info
Market Direction SPY ETF 500 Fund Info