Market Direction today seems a bit more on track as the market opened up slowly and then began to a slow push higher. This is the kind of action that I like to see in the market direction because it builds a much firmer base than big gap opens. I know it isn’t as exciting but a slow grind higher is what builds more solid support than big gaps and large up days.
The Weekly Initial Unemployment Insurance Claims were down once again with a drop of 16,000 to 339,000. This is one of the best market direction indicators there is. I have written a number of articles on the Weekly Initial Unemployment Insurance Claims as a market timing system. For investors who are unaware of this system, here is a link to a strategy article which outlines this market timing system.
As well reports out of the UK indicated that their economy actually expanded by 0.3 percent in the first quarter which reversed a 0.3 percent contraction in the fourth quarter. UK’s FTSE 100 rose 0.2 percent on the news and Germany’s DAX index was up 1 percent. If you checked the futures just before the open you could see that there was strength in the market direction for the open.
Market Direction News
This morning I sold puts on Exxon Stock as it fell on its earnings which while meeting expectations contains some rather disturbing economic trends for the stock. The stock fell right from the open and I sold my puts. That trade alert can be read here. United Parcel Service Stock was up 1.8 percent on better earnings and Dow Chemical was up 4.9 percent after releasing earnings that topped expectations. Potash Stock was also up 2.3 percent on also beating earnings at .63 cents a share and they announced they will not be buying a bigger stake in Israel Chemicals Ltd which a lot of investors see as a positive for the company.
Gold rose to $1,452 an ounce, up $29 dollars which has pushed up Barrick Gold Stock, among others, to 19.68 at mid-day.
Market Direction Intraday and IWM ETF Russell 2000
As investors know, I have been watching the Russell 2000 as it is a great market direction indicator. Yesterday IWM closed above the 50 day simple moving average (SMA) and today it is building on those gains.
Market Direction Intraday and the S&P 500
Below is the intraday chart for the S&P 500 around 2:00 PM. The all time high from April 11 is definitely within striking distance. At 2:00 PM the market direction up has pushed the S&P 500 to 1591.44 less than 6 points away from breaking into new highs. If the market direction can break the old high it has to remain above that high to confirm that the correction is finished.
Market Direction S&P 500 Intraday Apr 25 2013
Market Direction Portfolio
For FullyInformed Members who follow Doug Harris’ Market Direction Portfolio, yesterday he had bought back into the portfolio but as the market kept pulling back he kept lowering his stop. Doug was determined not to get stopped out unless absolutely necessary. This morning he commented that investors following the portfolio could have bought in this morning and earned over half a percent more than his entry point which was $77.98 yesterday in the UDOW ETF. Doug has done a marvellous job of handling the market direction portfolio and he must be pleased to not have been stopped out yesterday. His returns have been excellent to date and he is on track to earn 1.5% a month depending on how the rest of April plays out. You can review his Market Direction portfolio trades for 2013 here.
Market Direction Intraday Summary for April 25 2013
The next stage in the market direction move higher then is for the S&P 500 to set a new high and then confirm that high. This is what I have waited for as a signal to commit more capital to my Put Selling trades. This will not be new capital from my cash portfolio but is capital from earlier Put Selling trades that expired in March or were closed in March and early April and which I have not placed back into the market. The establishing of a new high is important here. If a new high is made but the market direction turns back down we could be seeing a double top. I am not expecting that. I believe there is enough strength among investors to keep pushing the market direction up but any sign of weakness and you can be sure they will turn immediately to selling.
Internal Market Direction Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades for 2013