FullyInformed.com

Market Direction Technical Analysis Outlook For Dec 13 2012 – Lower Then Up

Dec 12, 2012 | Stock Market Outlook

The big market direction up move today came with the Fed’s announcement of basically what amounts to a QE4 program where bond-buying will be increased to 85 billion a month to keep interest rates low, try to assist unemployment and keep the fragile housing recovery growing. But the bigger news came with the Fed announcement that it will tie the present historic low-interest rates loosely to the unemployment rate and inflation rate. Bernanke is looking for unemployment to be at 6.5% or inflation at 2.5% before considering raising interest rates. I wrote an article about this earlier today so I won’t go into it here. You can read that article through this link.

The market direction which initially was up, stalled and then plunged as it became apparent that by and large these are guidelines only, and then Bernanke indicated that monetary policy cannot overcome any effects from a failure to resolve the fiscal cliff budgetary problem. By and large while the stock markets have become pretty used to the Fed announcements and Quantitative Easing, the effect longer term to stocks will, I believe, remain supportive of stocks. So even though we may see some selling following the Fed’s announcement, which has been the pattern in the past following such news, I believe any action that provides liquidity will assist stocks.

I believe the economic problems facing much of the globe will not be “solved” in a matter of a few years. In 2008 when the financial crisis really caught investors ‘ attention I indicated I would not be surprised if it took 10 years before the economies started to progress and return to what passes for normal. We are now into just the fourth year of a recovery effort. It will take more time in my opinion, but as an investor I look for profit in every market condition. The oil embargo crisis of 1973 to 74 took almost 6 years to see a full recovery and that was not a financial crisis. The gentleman who mentored me told me that often the worst stock markets are the most profitable and that it was important to learn to invest in all types of markets. From his advice I was able to devise strategies to assist in a variety of market conditions.

Fiscal Cliff And Market Direction

There are not many days left for an announcement on a resolution to the so-called fiscal cliff issue. If there is no resolution I expect some heavier selling. But at some point even if this issue is not resolved, politicians will realize that they must provide solutions to the severe economic issues facing the United States. The Tarp Bill for example was initially turned down by Congress and then later passed.

If there is a resolution I would expect a bounce higher in the markets as a relief rally of sorts from investors.

But if there is no resolution before the end of the year, investors holding profitable positions may want to look at the S&P 500 chart for the last month and consider using the S&P 500 as a stop. For example, the first stop around 1415 might be a good place to sell some positions and raise cash levels if the S&P should fall that low. The second level is around 1400 which again investors could consider for selling a few more shares. The third level is around 1385 and the fourth level at 1350. By 1350 depending on the strength of a decline to that level, investors may want to move aside and wait out any further repercussions of the fiscal cliff not being resolved.

Market Direction and stop-loss

Using the S&P market direction as a stop-loss for profit taking in the event of a decline.

While I am not expecting a non-resolution, I always believe it is best or have a plan or a strategy in place for that “just in case” scenario. Using the S&P 500 recent levels should assist in any fallout from worried investors.

A similar trade could be done from each of the levels as well including buying inverse ETFs or Hedge ETFs or even Spy Puts at each of the four levels. While on one hand investors could be selling stocks on any serious pullback, they could also be buying inverse ETFs to generate profits on the way down. I know that this is what will be happening with the Market Direction Portfolio.

Market Direction Technical Indicators For Dec 12 2012

Let’s look at the close of the market on December 11 to see where market direction will be for tomorrow.

For Momentum I am using the 10 period. Momentum is still positive but lower than yesterday.

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) is still positive and is higher than yesterday despite the sell-off during the day.

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 falling but still positive.

Rate Of Change is set for a 21 period. Rate Of Change is still positive and higher than yesterday.

For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is overbought and is now indicating market direction is lower.

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 and it too is signaling that the market direction is changing to down.

Market Direction Dec 12 2012

Market Direction Technical Indicators Dec 12 2012

 

Market Direction Outlook And Strategy

The market direction outlook or tomorrow is for the market to possibly try to climb but to turn lower. This is understandable after yesterday’s market breakout. While the Fast Stochastic and Slow Stochastic market timing technical indicators are signaling market direction is down, MACD is not concerned and continues to signal that the underlying trend is higher. The market direction is under pressure as much of the market is overbought. This move lower is an opportunity I will use for more Put Selling on my favorite stocks. With the underlying trend now higher it is not surprising after such a nice move higher for the market direction to rest and pull back for what might be a few days. But any pullback I will be using for Put Selling and looking for other opportunities as well.

Market Direction then for tomorrow is for the market to pull back.

Internal Market Direction Links

Market Timing Articles Index

How I Use Market Timing

Understanding Short-Term Signals

Various Market Timing Systems

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 …