Tuesday’s market was impacted by a number of things including the durable goods orders which were down again. The primary culprit though was the transportation and defense orders. When removed from the picture, orders rose 0.4% in May which was still slightly below expectations. Inventories though fell in May which would indicate that the economy is only grinding forward certainly not booming by any stretch. Meanwhile new home sales rose to their highest level in 7 years. Yesterday existing home sales in May rose to a five and a half-year high so obviously housing is picking up. Despite these reports investors seemed tired and disinterested as stocks spent most of the day simply drifting between positive and negative. The opening rally faded quickly into a sideways movement. The close was higher at 1.35 points for the S&P but essentially the index was flat after Monday’s big gain but it did not sell-off which is a good thing for the bulls.
Advance Decline Numbers for June 23 2015
Volume on Tuesday matched Monday’s with 3 billion shares traded. 60% of the volume was trading higher and the market saw 141 new highs and 42 new lows, both numbers of which were in keeping with Monday’s numbers.
Market Direction Closings For June 23 2015
The S&P closed at 2,124.20 up 1.35. The Dow closed at 18,144.07 up 24.29. The NASDAQ closed at 5,160.09 up 6.12.
Market Direction Technical Indicators At The Close of June 23 2015
Let’s review the market direction technical indicators at the close of June 23 2015 on the S&P 500 and view the market direction outlook for June 24 2015.
Market Direction Technical Analysis for June 23 2015
Stock Chart Comments:
The rally didn’t really continue today but at the same time, the rally didn’t end either, so for the bulls today was still a good day. The 20 day simple moving average (SMA) is turning back up which is another good sign for more upside movement. Meanwhile the close today saw a doji-cross candlestick which again often signals the next day or two could be down days. The best thing to say about today’s market movement was that stocks didn’t give back Monday’s rally.
Support and Resistance Levels:
These are the present support and resistance levels. These levels have hardly changed in months as the market continues to move sideways.
2100 is very light support. Stocks will have to stay above it to change it back to solid support and convince investors that the market has staying power and will push well beyond 2100. That still does not appear to be the case.
2075 is light support. Below that is 2050 which is also light support. Stronger support is at 2000 which has repeatedly held the market up throughout each pullback in January and February.
Weak support is at 1970. Stronger support is at 1956.
1870 and 1840 are both levels with strong enough support to delay the market falling and should see a sideways action attempt while investors decide whether to sell or buy.
The other two support levels 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 the bottom line.
A break of 1750 would mark a severe correction from the most recent high. This would be the biggest correction since April 2012. A pull-back of that size would definitely stun investors and bring to question whether the bull market is finished.
Momentum: For Momentum I am using the 10 period. Momentum is 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 June 18. The buy signal continued to strengthen on 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 remained positive but is pulling back a bit which could be part of the signal from the doji-cross candlestick. .
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is still pointing to a possible change in trend and it is climbing so the chance might be back to the upside.
Slow Stochastic: For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic tries to predict the market direction further out than just one day. The Slow Stochastic is still pointing up for stocks.
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 still pointing up and is also showing that the market is overbought.
Market Direction Outlook for June 24 2015
For Thursday investors should be aware of the doji-cross candlestick. Since January the doji-cross candlestick at the close has been followed by down days almost 75% of the time. Leaving the doji-cross candlestick prediction, the technical indicators are all turning positive or close to doing so. MACD is continuing to point to higher prices. The two stochastic indicators are starting to look overbought but there is still some room for the market to move sideways. The problem now for investors is that many are beginning to wonder if they acted too quickly on Monday without anything concrete coming out of the talks with Greece.
Whatever investors decide the indications are that tomorrow, June 24, will be weak to start the day but the close should still be positive. The announcement of a 7 to 1 split of Netflix stock will also help to boost stocks so I am anticipating a sideways but up day on Wednesday.
Meanwhile I will be posting some trade ideas later this evening to outline how I plan to take advantage of the Netflix stock split.
Stay FullyInformed With Email Updates
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)