The market direction outlook for today was for the markets to continue to be weak. We again saw heavy selling at the open and once more we saw that morning low being made. This is now becoming the norm for the markets. A drop in the morning and usually by around 10:00 to 11:00 the lows have been put in. This is making trading this market through either spy call options, which I do not do or the Trading For Pennies Strategy which I am doing, highly profitable. I will post today my IWM Trading For Pennies Strategy and explain the method I have used for the daily trades.
Market Direction Intraday For Oct 2 2013
The market direction repeatedly bounced around this morning at the 1680.34 level. Once more it is testing that 1680 level. On one hand this is good because it helps to give investors confidence each time 1680 holds that the S&P may hold on here. On the other hand each test draws in more sellers who become nervous. If the market direction pushes through 1680 and manages to close below it more than once than the rally is over and the market will turn lower.
Debt Ceiling Outlook
I am not expecting that to happen as there is no way the US Government can continue to function in this manner for very long. The debt ceiling with have to be resolved but how much damage the fighting will cause is tough to judge. At this point little damage has been done to the economy or stocks in general. A week of this though will be too much for investors to handle, in my opinion, and stocks will pull back.
NASDAQ Market Direction Setting New High
Yesterday the NASDAQ set another new high. Now reaching heights not seen since 2000, many analysts are claiming that this is a signal that the market direction is on the verge of a fall collapse. Other analysts look at the NASDAQ as signaling further gains ahead and a new secular bull market in tech stocks.
The one minute chart for today is below and you can see that there was not much to worry about this morning. Each little morning pullback has been followed by buying. The NASDAQ has had an incredible run, but this is not the index of 2000. Then it was filled with dot com companies and dozens upon dozens of names no one can remember because all those companies failed to even earn revenue.
Today many of the stocks within the NASDAQ are generating significant returns for shareholders and there are much stronger companies that in many respects are trading at reasonble price to earnings ratios.
The two indexes I am busy watching are the NASDAQ which has led the recovery in stocks from the bear market bottom of March 2009 and IWM the Russell 2000. Both of these indexes continue to point to this pull back as political in nature. The key for this market this fall will be the upcoming revenue and earnings reports. If revenue is better than the last two quarters the market direction will lift higher.
Market Direction Outlook Into The Close
I am expecting the weakness in the S&P 500 and Dow (in particular) to continue today. I am not expecting to see the markets close at the early morning lows of today but I do not seen a green closing unless something “good’ comes out of Washington (which seems rare).
The Dow has in particular been weaker than the other two indexes. This has been excellent for my market direction portfolio which was stopped out yesterday and I have not gone back into any positions since then.
Look for the weakness to continue but keep an eye on the 1680 level for the S&P 500 that it continues to hold the market direction from falling too steep. Then watch the NASDAQ and IWN for any signs that investors are pulling back on their bids to buy stocks in tech and small caps. At present I see nothing of concern aside from the 1680 level. IWM and the NASDAQ point to higher gains ahead once the debt ceiling is resolved.
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