Market direction can be influenced by many factors but a rally as big as the one today can be a game changer when it comes to the overall market direction. With the S&p 500 rallying over 2.5%, The Dow 2.37% and the NASDAQ 2.4%, investors obviously think that stocks will be moving higher and governments will be pumping more support into their economies.
If this does not happen there could be some selling down the road but for now the market direction is pointing to the rallying continuing. My market timing indicators are showing there should be some follow through tomorrow. Nothing big needs to happen tomorrow, just no pullback. I would expect by Friday there might be some selling but for now the market direction should be up for a while at least.
Market Direction As Determined By Market Timing Indicators
I don’t need to say much this evening. The stock market speaks for itself today. Investors are convinced the market put in a bottom earlier this week and the correction is finished. Whether this is true is tough to say.
Here are my market timing indicators for today’s S&P 500.
Momentum is about to go positive.
MACD at negative 0.53 is ready to turn positive and should give a market buy signal tomorrow if the market moves higher.
The Ultimate Oscillator has recovered from the past two days and with a reading of 56.75 it is back positive.
Rate of Change with a reading of negative 0.28 if pretty well flat If stocks move higher tomorrow Rate of Change will turn positive.
Slow stochastic is bullish and has given a buy signal.
Fast stochastic with a %K reading of 48.81 and %D at 19.00 is very bullish.
Market Direction Summary for June 6 2012
Market volume was good today. Market breadth strong. 86% of stock rose today. 91% of volume was up. Today marked the biggest rally this year. I expect a continuation tomorrow but it still is not time to throw caution aside and return to 100 percent invested. Instead consider the put selling tips in my other article today. Take time and scale into positions. Use weakness to enter positions and watch for downside stress because nothing has yet changed in the global economies, just the perception of change. But sometimes perception is all that it takes to change market direction back up.