Market timing technical analysis is easier some days more than others. Today’s market timing guess is one of those times. The closing candlestick said it all. Today’s closing candlestick was a black opening marubozu which means that the market opened low and prices fell throughout the day but the market did not close at the low of the day. Therefore a bounce may be in the works.
It is that bounce that has to be suspect. The only thing that can guarantee that stocks are going to move higher is a break of the most recent high which was set on April 2 with an intraday high of 1422.38. I believe the chance of this happening is slim at present, but the chance of the S&P 500 testing support at 1375 is high.
Market Timing / Market Direction For April 9 2012
Below is today’s S&P 500 chart covering the period of Jan 9 to April 9 2012. There are some technical items here of special interest. First you can see the blue arrows with the number 3 above them. I mentioned these several times in my market timing columns over the past several months. Every pull-back in the rally has seen 3 days of selling before the market direction uptrend continued. The purple arrows have a number 4 above them. That is the present pull-back. This time there have been 4 days of pullbacks which marks a break of the uptrend pattern and could signal a stalling of the rally here and market direction change.
Despite this though, today saw significant stock declines which means after 4 days of these declines, there could easily be a bounce. The decline over the past 4 trading sessions has been 2.9%. A normal pull-back can easily reach 5%.
On the same chart I have also marked two red arrows and the number 2 underneath them. These two red arrows indicate that the last two rallies in the S&P 500 have lasted just two trading sessions. This is not bullish at all.
Therefore overall the markets could easily be ready for a bounce. If there is a bounce I would not be surprised to see it last only a day. The S&P 500 I believe, needs to pullback to test how firm support is before it can move higher. Any bounce has to be suspect as far as I am concerned.
Market Timing / Market Direction Technical Timing Indicators
The market timing technical indicators are all falling from Thursday’s readings. Momentum is falling and has now turned negative. MACD is picking up steam as it falls with a very negative -3.59 at the close.
The Ultimate Oscillator is down to 51.19 with room to fall lower.
The Rate of Change has turned down dramatically with a reading of -2.42.
Both the slow stochastic and fast stochastic are getting low now. This is getting into bounce territory. They could easily be signaling a bounce is coming. If there is more selling on Tuesday the Stochastic indicators will end up quite low which usually means a strong bounce.
Market Timing / Market Direction Conclusion
My market timing indicators are all turning down. Market direction is presently confirmed as down. However with 4 days of selling and the slow and fast stochastic entering bounce territory, the S&P 500 could surprise with a bounce. However until the market breaks the old higher decisively, the market direction remains lower and any bounce has to be ignored as just that – a bounce.