Market Direction Technical Analysis Outlook For Dec 6 2012 – Rally Unconfirmed

Market direction is definitely all about the fiscal cliff. Stocks were selling lower into the morning and by 11 AM the S&P market direction was down to below 1399 when news came that a splinter group of 80 Republicans and Democrats had signed a letter calling for all options to be explored on taxes and entitlement programs. This was a clear signal that members of both sides of the debate are willing to talk and try to reach a compromise. While not directly challenging House Speaker John Boehner over the taxing issue for high income earners, the group is showing signs that both sides realize what is at stake and a compromise must reached.

Market Direction technical analysis cannot foresee these types of events. The Dow was the first to have a  market direction bounce higher and put in the best performance of the day for the indexes, up 82 points but for much of the afternoon it was up over 110 points. The S&P did not follow suit and while it recovered from the morning lows its market direction closed up just 2.23 points. The NASDAQ however was clipped by Apple Stock’s big intraday plunge and it saw its market direction fall 22 points closing back below the 3000 barrier again.

Market Direction and Geithner

After markets closed I watched an interview on CNBC with Timothy Geithner the Treasury Secretary. Geithner on one hand said that he felt a solution was within reach and in another comment he stated that the Republicans would probably allow the fiscal cliff to occur and he thought there was that chance that it would happen. Geithner then went further and told the interviewer that there was no way an agreement would be reached without tax rates going up on the top 2% of American earners. Then he said that reports showing the two sides far apart were being orchestrated. All in all a somewhat uneven and strange interview but considering the fiscal cliff mess, somewhat in keeping with the moment. How this interview could impact market direction is impossible to say as primarily he didn’t really say anything investors have not heard before.

Market Direction Technical Analysis

Let’s review the market direction technical analysis tools at the close of the S&P 500 today. Yesterday the Market Direction technical analysis outlook showed a shift in market direction was starting.

Market Direction Technical Analysis Tools – Dec 5 2012

For Momentum I am using the 10 period. Momentum is almost unchanged from 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 but it is lower again today. This marks the third day of declines since last Friday’s climb in MACD.

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 today despite the market direction bounce in the DOW. The move higher is not being registered with the S&P 500.

Rate Of Change is set for a 21 period. Rate Of Change is lower than yesterday and continuing to fall.

For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is overbought and indicates that the S&P market direction will be lower a few days out.

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 today’s readings are neutral.

market direction technical analysis Dec 5 2012

market direction technical analysis for Dec 5 2012


Market Direction Technical Analysis Out and Strategy for Dec 6 2012

The market direction technical analysis tools are not supporting today’s rally. This makes it very suspect. Momentum for one should have moved higher today but did not. The Fast Stochastic is pointing sideways for the market direction and MACD is still positive which are both good signs.

The fiscal cliff is the problem presently with the stock market direction and technical analysis is hard pressed to predict what politicians will do next. As we saw today any kind of positive announcement can move the market direction as much as any negative news.

Market Direction then for tomorrow is for the market to trend sideways to down. The market direction bounce today is not confirmed by the market direction technical analysis tools. This makes any kind of market direction bounce highly suspect. The strategy at present has to be to stay cautious and look for opportunities in rising stocks but to stay clear of those stocks in confirmed down trends unless you want to own stocks as market direction at present is setting a cautionary tone.

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