Market Direction Technical Analysis Breakout For Dec 12 2012

The Market Direction breakout today was partly caused by the fiscal cliff positive talk in the morning but also by investor sentiment as explained yesterday regarding the December effect. In the afternoon negative remarks on the fiscal cliff dropped the market direction like a rock as investors remain wary of the fiscal cliff issue, but the market direction still hung on to close with exceptionally nice gains.

All of the market indexes including the Toronto Stock Exchange entered into breakout territory and MACD which had dropped daily, today confirmed at the close the market breakout and that market direction is higher.

Market Direction And Capital At Risk

I stayed invested in the market throughout the recent correction but with the continual pullback in the MACD I stayed with Put Selling out of the money. The breakout is a signal that the market direction will now push and try to recover the highs for this year. Having now recovered all the post-election correction, there are no significant signs that the market will retest the November lows. I will be back placing my remaining capital which I withdrew as the correction commenced, into more Put Selling and looking for Bollinger Band Strategy Trades on my favorite stocks.

Market Direction Technical Analysis For Dec 11 2012

For Momentum I am using the 10 period. Momentum is still solidly bullish and now climbing higher.

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) has been the indicator I have been most concerned about. After today’s big jump, MACD has jumped and confirmed the market direction has broken to the upside.

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 positive and climbing higher. It is not yet overbought so there is room for more upside in market direction.

Rate Of Change is set for a 21 period. Rate Of Change is positive and is now back climbing higher signaling more upside is ahead.

For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is overbought and is signaling that a few days out we may end up moving sideways. This is not to say the market direction cannot move higher in the interim. The Slow Stochastic looks out more than a day and therefore by week’s end we may see the market direction turn sideways for a bit as the market consolidates before attempt to push to the year’s high.

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 also overbought but is signaling that there is more upside left for tomorrow.

Market Direction Technical Analysis for Dec 11 2012

Market Direction Technical Analysis for Dec 11 2012

The Market Direction Technical Analysis are now confirming that market direction remains higher. While there may be further backfilling as the market direction continues to climb, it will take something larger than a manufacturing report or an European issue to stop the market from challenging the high for 2012. If the fiscal cliff is not resolved but ends in a stalemate, that could end the rally, but this move higher is strong enough and has enough push that the market direction will have a hard time falling back to the November low.

Market Direction Chart Of S&P 500

Now having captured the Nov 6 high of 1428, the market direction can continue higher to challenge the high for 2012. The chart below shows the post-election recovery. This will not be a straight up scenario as the market direction is overbought, so some pullback and testing for support should be ahead for sometime in the next few days or possibly by the end of the week, but such a pullback in my opinion will be an opportunity to do more Put Selling or look for other investing opportunities.

Market direction breakout

Market Direction Breakout

Market Direction Outlook And Strategy

I will be back fully invested, over the coming days as the December rally continues. Whether this rally can be sustained beyond the first couple of weeks of January I cannot tell and I don’t believe anyone knows. This means the strategy of Put Selling should be to sell puts and buy them back when they provide a decent profit. I will carefully select which naked puts I will be holding into January but for now it looks like I will be back placing capital where opportunities present themselves.

Market Direction for Dec 12 is for the market direction to continue to push higher. 

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Understanding Short-Term Signals

Various Market Timing Systems