FullyInformed.com

Market Direction Is At Point of Change

Aug 1, 2012 | Stock Market Outlook

Market Direction is starting to reach the point of change. Unless something happens soon the short-term market direction is going to move back to down and I will be looking for opportunities to use my SPY PUT hedge particularly if volatility moves up.

The first market timing technical indicator that is signaling market direction is turning down is the Fast Stochastic. It is bearish at the close of today.  US Manufacturing activity was just below expansion at a freaking of 49.8. This is the second month below 50. You can see from this number why analysts are having a hard time calling for a recession. The reading is almost neutral rather than down or up. However construction spending rose in June  and the ADP report on private sector employment showed job gains in July of 163,000 which is above expectations. It should be interesting to see the payroll numbers on Friday.

Market Direction Treading Water

With market direction eroding slowly each day, the VIX Index is also climbing each day. Today saw a VIX reading of 19.18 before it closed at 18.96 for the day. While the market direction up seems to still be in tact, the VIX is signaling that investors are starting to worry. The problem is that the big jump last week was primarily built on an oversold condition, comments by the ECB and the belief by investors that the Fed must act soon.

VIX Index Reading

The VIX Index Reading is climbing as market direction is floundering.

By while the market direction is floundering, the market timing technical indicators for the past three sessions have supported the market direction jump to a new higher high. Right now though the market timing indicators are starting to turn down.

Market Timing Indicators For August  1 2012

The market timing indicators for today are beginning to show a few breaks. Momentum has turned to neutral. MACD which supported the rally and still does, is today turning lower. The Ultimate Oscillator is no longer overbought and is pulling back. At a reading of 60.57 it is still positive.

Rate of Change has turned negative, but again, it interprets what is happening presently and right now the market is having trouble grinding higher and the rate of change reflects this, but today it turned negative.

Slow Stochastic is neutral to bearish which means the market may not do much before Friday’s jobs numbers.

The Fast Stochastic though is bearish, indicating that tomorrow could see some additional selling.

Market Timing Technicals Aug 1 2012

Market Timing Technical Indicators for August 1 2012 are beginning to show a point of change in the market direction.

There is still strength in the above readings but the same level of strength from the previous 3 sessions is starting to fall away.

Market Direction Outlook

The S&P 500 is still hanging to the previous most recent high set on July 19 2012 of 1376.51. Today’s close was just short of that closing high. After three days of some selling the market is looking for a catalyst to push it higher. The selling in the past three sessions has been muted, particularly when compared to the past two pullbacks which you can see in the chart below. This is also a good sign that the uptrend still is intact. Tomorrow may see another down day but as long as it is small, then there should not be much change in readings.

Market Direction for Aug 1 2012

Market Direction still shows that the S&P is clinging to the previous most recent high.

Market Direction Summary

Stock markets are not rational. They are filled with emotional trading. It has always been this way. Investors are optimistic by nature yet worry about every issue and there is never a time when there have not been issues. Investors are forever fearful. They fear missing a rally and they fear being caught in a collapse. I believe selling options or trading options can reduce a lot of that fear.

The market direction up is still in tact, but if the market keeps floundering then the path of least resistance will be lower. In its statement, the Fed said that it would “provide additional accommodation as needed”. Analysts are looking at this statement as a clear sign that the Fed will act before the end of this year. I believe that will depend on two things, unemployment numbers and the Presidential election and if market direction is to continue higher, there must be investors willing to buy stocks at higher levels. Until then the strategy of buying favorite stocks on dips in market direction continues to be the best strategy for this market. How long that can last all depends on market direction and right now nothing indicates that the market direction trend of up and down then back up is going to change soon.

Search

Select to view all results...

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors

Recent Outlooks

Stock Market Outlook for Thu Mar 28 2024 – Choppy – Dips Likely – But Higher

Prior Trading Day Summary: On Wednesday investors returned and snapped up stocks that had drifted lower. The SPX bounced at the open and by the close it was up 45 points to close at 5248. The NASDAQ rose 83 points …

Morning Investing Strategy Notes for Wed Mar 27 2024

For FullyInformed Members the morning Investing Strategy Notes for Wed Mar 27 2024 discuss the outlook for Wednesday and comments on a possible correction and what it might entail. There are a number of trade ideas outlined including FedEx Stock …

Stock Market Outlook for Wed Mar 27 2024 – Unconfirmed MACD Down Signal

Prior Trading Day Summary: I lost my power shortly after the markets closed. Articles this evening will be shorter if I can post any. On Tuesday trading volume picked up as stocks fell for another day. The SPX closed near …

Morning Investing Strategy Notes for Tue Mar 26 2024

For FullyInformed Members the morning Investing Strategy Notes for Tue Mar 26 2024 discuss the outlook for Tuesday. As well there are comments on support levels to watch in the SPX for the week. There are a number of trade …

Stock Market Outlook for Tue Mar 26 2024 – Still Bullish

Prior Trading Day Summary: On Monday low trading volumes hindered the chance of a positive close. The SPX saw just 3.4 billion shares traded. This matches the volume on last Friday. While poor , it is also bullish as it …

Morning Investing Strategy Notes for Mon Mar 25 2024

For FullyInformed Members the morning Investing Strategy Notes for Mon Mar 25 2024 discuss the outlook for Monday and the shortened week ahead of the Easter holiday. There are a number of trade ideas outlined including FedEx Stock (FDX), Nike …

Stock Market Outlook for Mon Mar 25 2024 – Dip Likely But Higher Close

Prior Trading Day Summary: On Friday investors took profits ahead of the upcoming shortened Easter week with indexes sitting at all-time highs. On Friday the SPX closed down just 7 points to 5234. For the week the index was up …

Morning Investing Strategy Notes for Fri Mar 22 2024

For FullyInformed Members the morning Investing Strategy Notes for Fri Mar 22 2024 discuss the outlook for Friday. There are a large number of trade ideas outlined including FedEx Stock (FDX), Nike Stock (NKE), Lululemon Athletica Stock (LULU),  and more …

Stock Market Outlook for Fri Mar 22 2024 – Choppy – Dips Possible But Still Up

Prior Trading Day Summary: On Thursday all 3 indexes closed at new all-time highs for a second straight day. Volumes remained decent but stocks are seeing some selling as investors are taking a few profits with the indexes at new …

Morning Investing Strategy Notes for Thu Mar 21 2024

For FullyInformed Members the morning Investing Strategy Notes for Thu Mar 21 2024 discuss the outlook for Thursday following Wednesday’s FOMC interest rate decision and Fed Chair Powell’s news conference. There are a large number of trade ideas outlined including …

Stock Market Outlook for Thu Mar 21 2024 – Higher Still

Prior Trading Day Summary: On Wednesday the SPX, Dow Jones and NASDAQ indexes all closed at new all-time highs. Comments from Fed Chair Powell reaffirming 3 rate cuts in 2024 were still “on the table” was all that investors needed …

Morning Investing Strategy Notes for Wed Mar 20 2024

For FullyInformed Members the morning Investing Strategy Notes for Wed Mar 20 2024 discuss the outlook for Wednesday and the latest FOMC interest rate decision. There are also a number of trade ideas outlined including Chewy Stock (CHWY), SPY ETF, …

Stock Market Outlook for Wed Mar 20 2024 – All About The Fed – Bullish

Prior Trading Day Summary: On Tuesday the morning started with a dip down to 5131 but buyers were waiting for the dip and volumes picked up. Deep dips in a number of big caps like NVIDIA Stock (NVDA) found ready …

Morning Investing Strategy Notes for Tue Mar 19 2024

For FullyInformed Members the morning Investing Strategy Notes for Tue Mar 19 2024 discuss the outlook for Tuesday following Monday’s rally and before Wednesday’s latest FOMC interest rate decision. There are also a number of trade ideas outlined including Chevron …