The market direction outlook for Wednesday was for a higher close. Overall the market direction remains to the upside but as explained there is a lot of profit taking happening at present which is part of the reason the market is having trouble pushing through resistance levels at all time new highs.
In my intraday comments today I indicated that I am taking some profits, using stops more readily and I also will be closing trades more aggressively. This is not because I am concerned about an impending market drop which there is no indication of at this point in the rally. Instead it is to free up some additional capital to take advantage of weakness in specific stocks that are under growing pressure due to the increased selling as the market pushes into all time new highs.
Putting Cash To Work
The main reason now to begin to close trades earlier and increase cash available is to take advantage of dips in stocks that are experiencing some weakness. Most the weakness is being caused by sellers, primarily fund managers reducing their positions into the year-end. Last night I discussed Coca Cola Stock. Tonight it is Intel Stock. You can see that the recent rise in Intel Stock saw selling commencing on Nov 22. The stock fell immediately to the Lower Bollinger Band and continued to push lower for the past three days. I then discussed the Cash Cushion Strategy which I am using on Intel Stock. To enter into these trades though means more cash is needed. With the market direction under pressure, I want to raise capital to keep it doing “double-time”. In other words let my cash do one trade but then close it quickly, lock in the profit and enter another trade. This means that I am growing my capital quickly and well beyond 1% in a month.
After closing some trades I applied additional capital to the trade like Intel Stock which had moved lower for the three days prior to today. Using the cash cushion strategy I sold puts on the 22 and 25 of November. These types of trades are not available should I have all my capital tied to a trade that I did not want to close early. It makes a great deal of sense to close trades early and keep the capital working hard. You can review the Intel Stock trades through this link.
Weekly Initial Unemployment Insurance Claims
Due to the shortened week, the Weekly Initial Unemployment Insurance Claims were released today and they show that the number of claims is declining further than estimated. Today’s numbers came in at 316,000 showing continued growth among the employed.
Other Economic Numbers
Meanwhile order for American durable goods fell two per cent in October, but if we exclude transportation, they dipped just 0.1 per cent. As well the the Chicago purchasing managers index dropped to a higher than expected 63 in November from 65.9 in October showing a bit of softness in the manufacturing sector. The US Conference Board said its leading economic indicator rose 0.2 per cent in October. Yesterday we had the consumer confidence numbers for November which were down and today the University of Michigan released its numbers of consumer sentiment showing it rose to 75.1 in November which was up slightly from October’s 73.2.
Thanksgiving Week
As mentioned several times over the past couple of days, today marked the start of the Thanksgiving session for stocks and normally over the past 60 years, Thanksgiving has been a good time for stocks. That rally usually starts today and end next Friday. Almost as if on cue, the market direction today moved higher.
Market Direction S&P 500 Intraday For Nov 27 2013
You can see today’s market direction action below. A couple of interesting items to mention. First is that the morning low and then rally which I have used for the Trading For Pennies Strategy almost every day was evident again today. That morning low was also seen in the mid-afternoon after the market sold off over the lunch hour and then pushed to a new afternoon low around 1:00 PM.
When the afternoon low held though, investors bought back in and pushed the S&P higher but left it in a range of 1808 to the upside and around 1807 to the downside. I had though the market might close around 1805 to 1806 but instead it closed slightly higher at 1807.
Advance Declines For Nov 27 2013
Advancing issues outpaced declining issues again today with 60% advancing versus 37% declining and 202 new highs were made versus 95 new lows. The strength is still remaining with the bulls so it would be doubtful we will see any kind of a strong market pull back without an unknown catalyst to the downside.
Market Direction Closing For Nov 27 2013
The S&P 500 closed at 1,807.23 up 4.48 the third day of flirting with the 1808 level. The Dow closed at 16,097.33 up 24.53. The NASDAQ closed at 4044.75 up 27.
The IWM ETF closed at $113.45 after making yet another new high at $113.57 today.
Market Direction Technical Indicators At The Close of Nov 27 2013
Let’s review the market direction technical indicators at the close of Nov 27 2013 on the S&P 500 and view the market direction outlook for Nov 29 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 and moving higher.
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 on Nov 25. Today MACD is once again almost neutral as it trends sideways more than up or down.
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 moving higher today.
Rate Of Change is set for a 21 period. The Rate Of Change is positive but after moving sideways yesterday it is moving somewhat higher indicating some fresh buying was being experienced today.
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 neutral, neither up or down 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 29 2013
Friday the market is open only until 1:00 PM. A shortened day means probably not much action but overall the market direction technical indicators are pointing to a higher high on Friday even if only marginally.
Meanwhile closing trades early and often is becoming the normal way to handle puts that are declining in value. It is important to keep cash working. To do that means closing trades that have earned the bulk of their profit and then move to the next trade where the stock has sold off even if only slightly.
According to statistical analysis, the Thanksgiving period normally rallies from Wednesday to a week Friday. At present, looking at the Market Direction Technical Analysis, it appears to me that we are on track for a repeat performance this year. The shortened Friday then should see stocks move higher before closing at 1:00 PM.
Happy and Blessed Thanksgiving
I want to wish everyone a very Happy and a Blessed Thanksgiving. With Black Friday shopping and the bombardment of ads, we might be tempted to think that Black Friday is actually Thanksgiving. It’s not. It is a time for family and loved ones. It is a chance to pause in order to remember what truly is in important in our lives. It is the love we share with our family and friends. There is so much to be thankful for, not just at Thanksgiving but every single day. For those who frequent my site I offer my most heartfelt best wishes to you and yours that you enjoy a wonderful Thanksgiving. Take care and God bless.
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