Friday was a short day with the markets closing at 1:00 PM. The outlook was mixed with a bit of weakness and an expected slight downturn. Indeed this is what happened to stocks on Friday. Oil and gold were the big headline grabbers on Friday with oil plunging over $7.00 to around $66 a barrel and gold falling back $22 to $1175.50 an ounce US. Another interesting development was in copper which broke $3.00 on Friday falling to $2.85 a pound (US) which is the lowest level since 2010.
SPX 10 Day Intraday Market Direction to Nov 28 2014
The 15 minute intraday chart below shows the past 10 days for the S&P. You can see that despite Friday’s slight loss the Index has not yet broken to lower lows. To do that the index must close below 2065 and then 2056. At the present time the uptrend remains intact for the S&P. Any break lower this week though, must not break 2050, otherwise there will be heavier selling.
SPX 10 day chart to Nov 28 2014
Advance Declines For Nov 28 2014
Considering the shortened day on Friday volume was a respectable 2.5 billion shares. 70% of volume though was trading lower. Still despite the heavier down volume new highs came in at 287. Unfortunately the plunge in oil and gold sent enough shockwaves that there were 164 new lows which was quite the jump from Wednesday 32 lows. Volume could be advising that we will see lower prices on Monday, at least in the morning.
Market Direction Closings For Nov 28 2014
The S&P closed at 2067.56 down 5.27. The Dow closed at 17,828.24 up 0.49. The NASDAQ closed at 4791.63 up 4.31.
Market Direction Technical Indicators At The Close of Nov 28 2014
Let’s review the market direction technical indicators at the close of Nov 28 2014 on the S&P 500 and view the market direction outlook for Dec 1 2014.
Market Direction Technical Analysis for Nov 28 2014
Stock Chart Comments: The index set a new high early in the day on Friday but then moved lower into the early close. The 50 day is continuing to fall toward the 100 day and could break lower this week. The Bollinger Bands Squeeze is still underway and the Lower Bollinger Band is now turning sideways. Meanwhile the 20 day SMA which has risen strongly is also turning sideways.
A new support level rests at 2050 but it is light support and will not delay a fall for more than a few hours. 2000 is the highest level of decent support at present and while not strong, it should have enough strength to hold sellers back for at least a day in the event of an interim pullback. If 2050 should break stocks will collapse back to 2000 in very quick order. The next level after 2000 is at 1970 and then 1956..
Strong Support Levels are at 1870 and 1840. Both levels are strong enough to delay the market falling.
The other two support levels not shown in the chart above are 1775 and 1750. I have explained that these two are critical support for the present bull market. While 1775 is important it is 1750 that is now the bottom line.
A break of 1750 would mark a severe correction of more than 13% from the most recent high. This would be the biggest correction since April 2012. A pull-back of that size would definitely stun investors at this point and it is not something I am anticipating at this time.
Momentum: For Momentum I am using the 10 period. Momentum is still positive and moving sideways.
MACD Histogram: 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) issued a buy signal on October 22. MACD is no longer gaining strength and continues to narrow the divergence. While the divergence is still positive it is now very narrow and we could get a sell signal Monday or Tuesday.
Ultimate Oscillator: 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 but falling rapidly.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change is staying positive and is now at 9.44 up from yesterday. The Rate Of Change is back trending lower which could be an early signal that a new trend is about to start.
Slow Stochastic: For the Slow Stochastic I use the K period of 14 and D period of 3. As the Slow Stochastic tries to predict the market direction further out than just one day. The Slow Stochastic is signaling market direction is down and it is extremely overbought.
Fast Stochastic: 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 signaling down for stocks and is also extremely overbought. The Fast Stochastic has issued a fairly strong sell signal at the close.
Market Direction Outlook and Investing Strategy Notes for Dec 1 2014
Historically the first trading of December has seen the NASDAQ up 19 of the past 26 years. Since 1950 the month of December has been the best performing month for the S&P on a regular basis. 2002 was the worst month for December since 1931 for the S&P, as it fell over 6%. Of the past 22 Decembers, the Dow has been up 17 times.
So while the trend looks strongly favorable historically, technically there are a lot of signals that stocks may close lower on Monday. I won’t be surprised to see a jump near the open for the market direction but then selling into the later morning. A rally over the lunch hour or early afternoon I think will bring in sellers who will close the S&P lower on Monday.
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