FullyInformed.com

Market Direction Clings To Bernanke Put Despite The Lack Of QE3

Jul 11, 2012 | Stock Market Outlook

Market direction remains almost unchanged from my last market direction outlook. The stock market direction remains caught in a narrow trading range between 1300 on the low-end and 1375 on the top end. Yesterday’s stock market action was like today’s. The stock market direction took a tumble and then recovered. Today the stock market wandered while waiting for the Fed Chairman to make an indication about possibly commencing more Quantitative Easing. When that didn’t occur, the stock markets fell including more than 120 points on the Dow, but even the Dow managed to rally back and closed down just 48 points. Over the years of doing Analysis of the Stock Market this continual recoveries as a sign of strength among bullish investors who still believe there is upside to come in the market direction.

Market Direction Still Shows Resilience

At today’s market close the S&P was almost unchanged. While I realize that the media is full of articles about how the market direction has now been down for the longest period since May, personally I don’t believe there is any need to worry about this kind of action. What is important is that the market direction while still falling, shows remarkable resilience among buyers who see values in many stocks. As well, in bear markets almost all stocks fall, but in the case of the present market, many stocks continue to make new 52 week highs. While they are not in the majority it continues to be a good sign when doing analysis of the stock market. The stock market direction decline has now been 5 days and the S&P has returned to the 100 day moving average.

The S&P has now given back almost all the gains made from June 29 to July 3. That said, the market direction remains largely unchanged. The S&P is stuck in a trading range.

The problem the stock market is now facing is after 5 days of market direction down, most of the market timing indicators are showing stress. One more down day and MACD Moving Average Convergence / Divergence will be signalling a short-term sell signal.

Market Timing Indicators For July 11 2012

Among today’s market timing indicators momentum remains the strongest and continues to reflect the underlying strength among buyers. MACD Moving Average Convergence / Divergence has continued to fall and one more day could see this market timing indicator flash a sell signal.

The Ultimate Oscillator is barely positive with a reading of 50.22. Rate of Change is reflecting the same concern as the Ultimate Oscillator.

Slow Stochastic however is starting to show the selling pressures are weakening but fast stochastic is showing that selling is still present. The readings of both the slow stochastic and fast stochastic show that for the most part, investors are mixed which is definitely indicative of this market.

Market Direction and market timing indicators for July 11 2012

Market Direction remains sideways with a slight downward bias according to market timing indicators.

Market Direction and Market Timing Outlook

The outlook for market direction remains unchanged. The stock market is stuck in a range. Presently 4 market timing indicators are continuing to fall and 2 other market timing indicators are bearish. The consensus among market timing indicators is that market direction remains lower while overall the underlying market direction is still sideways with a slight bias to the downside. However after 5 days of selling, the S&P 500 could see the market direction shift back to up for at least a day or two.

Overall the indication from earnings is that many companies are going to miss their reduced expectations. Those investors who are waiting for Bernanke to turn on the printing presses do not realize that the stock markets have generally only corrected and not severely. I would think until something much worse hits the economy, Bernanke will continue to take a wait and see approach which may in the end prove the better choice.

Market direction is still holding to the belief that the Bernanke put on the market remains so the downside is limited. But the upside is also limited by earnings reports, and slowdowns in Europe, China, Brazil and the United States.

As mentioned in my market timing system article about using Initial Unemployment Insurance Claims, the best choice with market direction stuck sideways is to stay cautious and raise cash when opportunities allow. The market direction will eventually break one way or the other which will afford lots more income generating trades. Until then patience is a key ingredient to use in the present market direction environment and increasing cash levels to get ready for future trades is prudent.

Search

Select to view all results...

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors

Recent Outlooks

Stock Market Outlook for Fri Jan 24 2025 – Still Overbought – Choppy – Dips Likely – But Higher

Prior Trading Day Summary: On Thursday the market was trending primarily sideways until the final 15 minutes when an influx of buy orders sent the SPX up from 6098 to 6118 for a new closing high. It also left the …

Morning Investing Strategy Notes for Thu Jan 23 2025

For FullyInformed Members the morning Investing Strategy Notes for Thu Jan 23 2025 review the outlook for Thursday following another higher close on Wednesday.. Stocks discussed include Abbott Labs Stock (ABT), GE Vernova Stock (GEV), Texas Instruments Stock (TXN), American …

Stock Market Outlook for Thu Jan 23 2025 – Overbought – Possible Flat to Lower Close

Prior Trading Day Summary: Wednesday saw another positive day and the SPX moved above the 6100 intraday, for the first time in history. The index closed at 6086.37, a new closing high.  Volume dipped by 400 million shares to 4.4 …

Morning Investing Strategy Notes for Wed Jan 22 2025

For FullyInformed Members the morning Investing Strategy Notes for Wed Jan 22 2025 review the outlook for Wednesday. Stocks discussed include Netflix Stock (NFLX), United Airlines Stock (UAL), Discover Financial Stock (DFS), American Airlines Stock (AAL), GE Aerospace (GE)  and …

Stock Market Outlook for Wed Jan 22 2025 – MACD Up Signal Confirmed

Prior Trading Day Summary: Tuesday’s rally was stronger than expected with the SPX rallying 52 points ending the day above 6000 at 6049. Volume rose 400 million shares to 4.8 billion with 74% of volume advancing and 79% of all …

Morning Investing Strategy Notes for Tue Jan 21 2025

For FullyInformed Members the morning Investing Strategy Notes for Tue Jan 21 2025 review the outlook for the third week of January. Stocks discussed include JP Morgan Chase Stock (JPM), Goldman Sachs Stock (GS), Apple Stock (AAPL),  Netflix Stock (NFLX), …

Stock Market Outlook for Tue Jan 21 2025 – Unconfirmed MACD Up Signal

Prior Trading Day Summary: Friday’s rally was ended with the second best rally of the week. The SPX rallied 59 points to end the week at 5996 but intraday it moved back 6000. Volume was higher than usual for the …

Morning Investing Strategy Notes for Fri Jan 17 2025

For FullyInformed Members the morning Investing Strategy Notes for Fri Jan 17 2025 review the choppy trading on Thursday and outlook for Friday. Stocks discussed include UnitedHealth Group Stock (UNH), 3M Company Stock (MMM), Charles Schwab Stock (SCHW) and more …

Stock Market Outlook for Fri Jan 17 2025 – A Little Weakness But Still Higher

Prior Trading Day Summary: Thursday saw investors taking profits after Wednesday’s huge rally. In the final hour of trading the SPX was positive until sellers pushed back, taking profits and sending the SPX lower by 12 points to end the …

Morning Investing Strategy Notes for Thu Jan 16 2025

For FullyInformed Members the morning Investing Strategy Notes for Thu Jan 16 2025 review Wednesday’s massive rally and outlines the outlook for the rally and handling trades over the next several weeks. Stocks discussed include Taiwan Semiconductor Stock (TSM), UnitedHealth …

Stock Market Outlook for Thu Jan 16 2025 – Higher Still

Prior Trading Day Summary: On Wednesday everything fell into place as the oversold market staged a strong rally as bond yields dipped on the back of slightly weaker core CPI numbers and exceptional earnings from the first round of bank …

Morning Investing Strategy Notes for Wed Jan 15 2025

For FullyInformed Members the morning Investing Strategy Notes for Wed Jan 15 2025 review Tuesday’s volatile day of trading along with the outlook for Wednesday’s trading. Stocks discussed include TQQQ ETF, Taiwan Semiconductor Stock (TSM), UnitedHealth Group Stock (UNH), Bank …

Stock Market Outlook for Wed Jan 15 2025 – All About Bank Earnings

Prior Trading Day Summary: On Tue Jan 14 2025 stocks once more gyrated between gains and losses. The S&P was as low as 5805 and as high as 5871 before closing up 6 points to 5842. Volume dipped lower on …

Morning Investing Strategy Notes for Tue Jan 14 2025

For FullyInformed Members the morning Investing Strategy Notes for Tue Jan 14 2025 review Monday’s market action which ended with a slight gain. Stocks discussed include TQQQ ETF, Citigroup Stock (C), JP Morgan Chase (JPM), Wells Fargo Stock (WFC), Goldman …

Subscribe For The Latest News