The market direction outlook for Thursday was for a rebound rally to occur. Most of Thursday’s rally was technical in nature but still it’s good to see the market direction turn around and push back a bit. The early morning saw the best run-up as the S&P easily pushed up through 1700 and made it all the way to 1704 before concerns over the debt ceiling hit investors and plunged the market all the way back to 1694. A rally in the afternoon tried to recapture 1700 but failed and spooked investors pushed the market direction back down and below 1694. The last half hour was dramatic as investors moved back into a buying mood near the close and almost pushed the S&P 500 to 1700 with a close at 1698.67.
Market Direction Action for S&P 500 for Sep 26 2013
You can see all the action in the 1 minute daily chart below.
Weekly Initial Unemployment Insurance Claims
The Weekly Initial Unemployment Insurance Claims came out today and continue to show some strength in the unemployment front. In the week ending September 21, the advance figure for seasonally adjusted initial claims was 305,000, a decrease of 5,000 from the previous week’s revised figure of 310,000. The 4-week moving average was 308,000, a decrease of 7,000 from the previous week’s revised average of 315,000. The Weekly Initial Unemployment Insurance Claims is on the verge of perhaps falling below 300,000 for the first time in more than 5 years. This will be a significant event for the stock market. There has never been a period in stock market history when the Weekly Initial Unemployment Insurance Claims has continued to fall below 310,000 and the market direction changed to down.
Housing Mortgage Rates Lower
There was good news on the housing front as a report showed that average US rates on fixed mortgages fell this week to 4.32 % which is the lowest in two months and followes on the Fed announcement of last week.
BlackBerry Stock Seems Doomed
BlackBerry Stock seems doomed at this point with its shares moving lower to $8.22 on the TSX. Smartphone suppllier Jabil Circuit advised they are ending their partnership agreement with BlackBerry. As well the proposal from Fairfax Financial seems at odds with what the stock continues to do. Fairfax has announced its intention of buying the company for $9.00 a share. The stock that had rallied on the news now has continued to fall. I have had a number of requests from investors wondering whether I think BlackBerry is worth trading. Personally I don’t. In investing it is all about safety and income. There is nothing safe about BlackBerry stock and with so many stocks available for trading, I don’t see the reason for trading BlackBerry Stock.
IWM ETF Outlook
IWM ETF today closed up .59 cents or slightly more than half a percent. Despite weakness in the major indexes the IWM ETF composed of 2000 small to mid cap stocks is flirting with all time highs and has remained strong throughout the past little weakness. The Ultimate Oscillator is falling lower as the overbought condition is being worked out. The Slow Stochastic is sitting almost at neutral with a %K reading of 86.15 and %D reading of 85.72. The bias remains to the upside but only slightly. The same holds true for MACD which is sitting at a positive .20 which is low on the divergence scale but at least remains positive. The IWM has been a good ETF for both Put Selling and as a signal for the health and direction of the markets. Right now it remains positive although it has seen its positive readings continue to erode.
Advance Declines For Sep 26 2013
The advance decline numbers are continuing to tell us that there is underlying strength in the stock market. 60% of stocks were advancing today versus 36% declining. 144 new highs were made today versus 83 new lows. Again traders who are positioning themselves to the downside need to be careful as these numbers each day do not reflect a market in trouble.
Market Direction Closing For Sep 26 2013
The S&P 500 closed at 1,698.67 up 5.90. The Dow closed at 15,328.30 up 55.04. The NASDAQ closed at 3,787.43 up 26.33
Market Direction Technical Indicators At The Close of Sep 26 2013
Let’s review the market direction technical indicators at the close of Sep 26 2013 on the S&P 500 and view the market direction outlook for Sept 27 2013.
For Momentum I am using the 10 period. Momentum is positive and rose slightly today.
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 Sep 9 which was confirmed on Sep 10. MACD is still moving lower and with a reading today of 1.09 all it will take is one day of selling and we may see a sell signal emerge.
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 negative very oversold.
Rate Of Change is set for a 21 period. The rate of change made a surprise move up yesterday but today turned sideways reflecting steady but not overly enthused buying in the market.
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 down.
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 for tomorrow is lower but the readings are so close that the Fast Stochastic is really more neutral than down or up.
Market Direction Outlook And Strategy for Sept 27 2013
Today was a technical bounce back from 5 days of selling. Tomorrow we could see more sideways action with a bias to the downside. Overall though I do not see a big correction on the horizon at all. The advance decline readings shows continued strength and IWM ETF is certainly remaining bullish on small cap stocks. I am unchanged in my Put Selling but in the Market Direction Portfolio I was stopped out today and did not put in place any further positions. My bias though at this point is pretty neutral although there are signs that the market direction wants to push back up.
Tomorrow is a wait and see day and I am not expecting anything dramatic up or down. Investors I believe are waiting for the debt ceiling issue to be resolved and then they will be back buying.
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)