The Market Direction on Tuesday started off a bit slow but then investors obviously decided that earnings may surprise to the upside. Stocks, particularly beat up sectors like Technology were quickly bought. Many stocks had big moves. Some of the stocks I follow such as Microsoft Stock (MSFT) (Up 3.52%) and Intel Stock (INTC) (Up 3.13%) had excellent moves. The VIX Index fell back and the Dow and S&P set all time new highs. Not everyone joined in the party though. Apple Stock fell to $422.75 before closing up .77 cents. I sold puts in my biweekly Put Selling strategy trade on Apple Stock.
Meanwhile the TSX jumped 1.1 percent as it rose 139.49 points. Canadian Banks were higher but so too were commodities. Commodity related stocks like Cliffs Natural Resources (CLF) (Up 8.8%) moved higher but they have been badly hammered over the past several weeks.
Overall then, the market direction technical outlook from yesterday followed through today. This places the number of correct calls from my short-term market timers for 2013 at 83% which is very high.
Market Direction Closing For Apr 9 2013
The S&P 500 closed at 1568.61 up 5.54 points and the Dow closed at 14673.46 up 59.98 points. The NASDAQ closed at 3237.86, up 15.61 points.
Dow Market Direction
The Dow Index market direction was flat for most of the morning (Point A) and then rose to POINT C with a gain to $14715.40 and then sold off into the close. All the indexes followed the same market direction pattern.
Market Direction Russell 2000 (IWM)
Meanwhile the small cap ETF, the Russell 2000 (IWM) which I have mentioned many times in the past, was down today, but just slightly. Yet this is a bit out of context for what the other indexes were doing. Instead the Russell 2000 still closed above the 50 period simple moving average (SMA) after testing it during the day. I would have thought though that the Russell 2000 would have moved higher today with the rest of the markets.
Market Direction Technical Indicators At The Close of Apr 9 2013
Let’s take a moment now and review the market direction technical indicators at the close on the S&P 500 and view the outlook for Wednesday April 10.
For Momentum I am using the 10 period. Momentum is positive and rising slightly from yesterday.
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) is still negative and the sell signal is still active but the signal is rising.
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 still positive but despite today’s market direction up, the Ultimate Oscillator is almost unchanged from Monday.
Rate Of Change is set for a 21 period. Rate Of Change is still positive but it too is unchanged from Monday.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is signaling market direction has moved from neutral to up.
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 that the market direction is continuing up.
Market Direction Outlook And Strategy for Apr 10 2013
The market direction outlook from the technical indicators is still split. The Ultimate Oscillator, Rate of Change are sideways while the Fast Stochastic, Slow Stochastic and Momentum indicators are showing market direction as up higher. Only MACD is indicating market direction is still negative. The technical outlook then is for the market direction to continue to move up.
That said, we have seen this picture many times before. The market has a great up day and then a not so great down day. I think tomorrow though may be different although the Russell 2000 being down puts a bit of a damper on any big move up. I am staying with my strategy of Put Selling the dips or drops on my favorite stocks and not worrying too much about any severe correction. While there are signs of weakness in the market earnings season is just now underway and if earnings are even remotely decent, the market direction could move further up from here.
This is not going to be a straight up scenario such as we saw in January, but April is a strong month and with last week behind us, April is beginning to demonstrate the historic norm, which is a disappointing first week and then a push higher into the end of the month. Market Direction tomorrow then could see weakness in the morning as the selling after 3:00 PM today might bleed over into tomorrow morning but overall there should be more upside.
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