As the market direction continues to climb, the number of analysts looking for a more severe correction of up to 10% continues to grow. In general people are pretty pessimistic when it comes to the market direction moving higher. Most seem totally convinced that this market is out of sync with reality.
My own opinion is I stay with the market direction trend and continue to profit through my watch list of stocks. Today I did a BNS Stock trade, an IWM Trading For Pennies Strategy Trade and was on a lookout for Seagate Stock Put Selling opportunities and watching one of my favorite stocks, YUM Stock for covered calls opportunities. Today’s market direction action continued to follow my market direction technical indicators from Friday again.
Market Direction Action For Today
I thought it was interesting that many media outlets called today’s market action modest. I disagree completely. Today’s market direction action was exciting to say the least. The day started with some selling which was immediately bought into which contained the selling and pushed the market direction up. The S&P 500 then exhibited the classic bull pattern of higher highs and higher lows until the end when the low about half an hour into the close moved lower than the previous low. However the market direction took off in the last half hour and the market closed at the top.
This little dip that was lower than the previous low is indicative of an aging rally. While today’s action was bullish, the close shows that investors are still wary of the market direction. I won’t be surprised to see some selling enter the market tomorrow in the morning.
Market Direction Mar 11 2013 - 5 minute chart
Market Direction Closings
The S&P 500 closed at 1556.22, up 5.04 points as it nears its all time high. The Dow set another new all time high as it closed at 14,447.29, up 50.22 points. The NASDAQ closed at 3252.87 up another 8.51 points.
Market Direction Technical Indicators At The Close of Mar 11 2013
Let’s take a moment now and review the market direction technical indicators at today’s close on the S&P 500 and view the next trading day’s outlook.
For Momentum I am using the 10 period. Momentum is still solidly positive and is continuing to climb following today’s move higher in the market direction.
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 the buy signal remains active. MACD is continuing to climb signaling more upside is still ahead.
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 very overbought which is a good sign for this market. As explained in previous market direction outlooks, the overbought state of the Ultimate Oscillator is important particularly if it can climb even higher signaling strength within the buying as the market direction pushes higher.
Rate Of Change is set for a 21 period. Rate Of Change is still positive and again despite the market direction moving higher today, the Rate Of Change is flat signaling that volume is weak as investors are buying but not with a lot of conviction.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is overbought to the extreme and is still signaling that market direction will be higher in two or three days out, however the readings between the K period and D period are closing which is signaling a neutral situation is developing.
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 extremely overbought and just like the Slow Stochastic it is signaling that the market direction should turn neutral within a day or two.
Market Direction Outlook And Strategy for Mar 12 2013
The market direction outlook for March 12 remains positive but once again the warning signs indicate that the market direction is more neutral than up. However the most important signal is that there is no big drop on the horizon as all the market direction technical indicators are showing that while investors’ conviction is being tested here, most are still buying the dips and remain reasonably convinced that the market direction can move higher.
My strategy remains as before, namely smaller put sell positions and looking for opportunities where they may appear within my stock watch list. I am not holding Spy Put Options and I do not believe that trying to guess when the next correction will happen is worthwhile. When any correction appears I will have plenty of time to buy Spy Put Options to earn income in a down trend. Right now though all signs point to no big correction ahead but instead the market direction is neutral with the bias to the upside.
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