This is an abbreviated market direction outlook for August 15. Most of the past two days have been spent researching and completing a number of very large strategy articles. I posted the the next three on generating income off in the money naked put positions. The three articles look at the mechanics of how to approach handling in the money naked puts that are about to expire while at the same time continuing to try to generate income. The first three articles looked at Aflac Stock, Coca Cola Stock and BBT Stock. You can access those articles starting with Part One here.
I have to abbreviated the market direction outlook for both the S&P and the Toronto Stock Exchange. Here is a short outlook as to what I am expecting for tomorrow.
SPX Market Direction Outlook And Strategy for August 15 2014
Perhaps the most important aspect of today was that the SPX closed just below 1956. The S&P is now sitting just below the 50 day simple moving average (SMA) which could lead to a bit of selling pressure tomorrow simply because the S&P reaching the 50 day will bring out sellers. I do think the S&P will try to break through the 50 day SMA and close above 1956 but it may not occur on Friday. We could therefore see a bit of a rest on Friday and more a sideways action with a slight bias lower although the technical indicators do not agree and continue to point to further advances.
Whatever the case for the S&P, for any of my naked puts that are sitting at the money near the close, I will be rolling them forward at the same put strikes as I believe any selling pressure tomorrow will not last and the S&P will break above the 50 day SMA. At that point I will have to reassess. Again the main catalyst to the downside could be further issues in Ukraine which investors are not ready for.
A bit of concern was with the IWM ETF which represents the small cap Russell 2000. The ETF only moved 17 cents for a gain of just 0.15%. It closed at $113.61 and could be signaling that the advance will run into trouble at this point. That bears watching for Friday.
Toronto Stock Exchange Market Direction Outlook
For Toronto, stocks continued to push just above the 50 day simple moving average (SMA) but moved higher by just 28.45 points. Still it was another advance. Momentum though is still negative and turning lower. MACD is still also negative. The Slow stochastic is starting to turn back down and the Rate Of Change while still positive, also is turning back down. We could be seeing the market take a breather here and either turn sideways for Friday and move lower for a rest.
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