On Friday the market direction at the close was looking somewhat glum for this week. Monday though seemed to want to rally and at the start there was a huge rally. But as explained in last night’s market direction article, losing a big rally such as happened on Monday almost always means a soft day for the next day. Today then there was some selling and at one point the Dow was down 90 points and then traders and dip buyers stepped in late in the day and pushed the Dow higher. It closed down 32.75 points. The S&P managed a small gain, but overall, the loss of the rally on Monday did its usual and the today the market gave back some of the previous rally.
The question now is will the softness continue or will the stock market regain its footing and move higher.
Let’s look at the market timing technical indicators to see if we can figure out what might happen to market direction on Wednesday.
Market Timing Indicators for Market Direction Outlook
You can see that there is really no much change. Momentum is still negative and almost unchanged from yesterday. MACD is almost unchanged from Monday and still negative. The Ultimate Oscillator is back climbing but rate of change remains almost unchanged and negative. The Fast and Slow stochastic indicators are both slightly positive, but again almost neutral.
Market Timing Indicators for October 2 2012
The general consensus is basically more of the same. More of what we have already seen, a market direction stick on sideways with a bias more down than up.
Market Direction Summary for October 2
Investors remain wary of the market direction. Most are sitting on the sides trying to time when to jump in with capital. Monday some got hurt as they jumped in on the big rally only to watch it fizzle out. Today a lot were surprised by the drop of 90 points in the Dow before it recovered.
Nothing new to report so the market direction remains the same. Until there is a bit of good news, to strengthen the market, the bias will be for a pullback or at the least a sideways market direction.
Tomorrow then I would expect more of the same. The two stochastic indicators are not signaling strong enough readings for me to believe the market direction will push much higher yet. But as many analysts and investors wonder if the market has topped here, my guess is probably not. You can read my article that looks at how to spot market tops and hopefully that article will assist readers in being better prepared for spotting a market direction top and preparing for a market decline.