Market Direction remains heavily oversold but there is still no catalyst to get that bounce out of the markets. The stock markets tried to get a bounce going today into the early afternoon but then sellers took hold and stocks continued to end poorly. At the end of the day, all the indexes basically were back where they had started. Investors have now pushed all the indexes to the 200 day moving averages. There is support here but it will only last for a short while. The market direction needs to change and for that to happen investors to have reasons to buy back into stocks to push the market direction higher.
Market Direction Back to The 200 Moving Average
Support continues to hold the S&P 500 to the 200 day moving average whereas the other two indexes have fallen below. The closing candlestick for today shows indecision among buyers and sellers. There is simply no reason yet to buy. Whether it is the so-called fiscal cliff, Greece, the Euro, the Dollar or the downgrades of earnings and a number of stocks, investors are looking for someone else to start the buying.
There continues to be good news on the consumer sentiment front and within the homebuilding industry but that is not enough for investors.
Market Direction Close Of Day Action
The end of day market direction shows the bearishness among investors. Today’s action shows the rally attempt that started over the noon hour and lasted a little over an hour. Then sellers stepped back in, flipping some stocks for even just a few pennies as they tried to squeak out a profit. The close on all the indexes was the same. Selling right at the close is typical of bear markets and not bull markets. This is because investors have no conviction to hold stocks overnight. They worry what the next day might bring. They are therefore content to simply do day trades while waiting for a clear market direction signal.
Market Timing Technical Indicators
The market timing technical indicators for the close today show the possibility of a technical bounce remains with the market.
Momentum is negative and is starting to grow to the downside which is never good for market direction having a bounce.
MACD is down slightly from Friday’s close.
The Ultimate Oscillator is extremely oversold and ready for a bounce.
Rate Of Change however continues to slide deeper into negative territory despite Friday and today where the markets trended sideways.
The Slow Stochastic is extremely oversold and ready for a bounce.
The Fast Stochastic is confirming the slow stochastic and it too is signalling a bounce should be happening sooner rather than later.
Market Direction Outlook For Tuesday Nov 13 2012
The market timing technical indicators are still pointing to a bounce in the market direction but without a catalyst of some kind, this may not happen. For investors this is not the best climate for put selling against stocks you do not want to own. The chance of assignment is high until the market direction becomes clearer.
Meanwhile the best strategy which I have been using in this sideways market direction is the Trading For Pennies Strategy which can be traded in any market environment, up, down or sideways.The outlook for tomorrow is for much of the same unless something gets investors excited again. Meanwhile momentum may be the best indicator to watch as it is warning that pressure may be starting to build to the downside for market direction.