The market direction outlook for Friday was for the unemployment numbers to be a catalyst to push stocks higher or lower. It really did neither as the numbers did not nothing more than add more uncertainty to the market. The question now turns to the next Fed meeting and whether there will be a larger tapering than expected. I am not expecting that to be the case but that’s just my opinion.
Retail Earnings
Part of the problem last week though was the retail stocks and the poor numbers being bantered about. Stocks like Bed, Bath and Beyond tanked and all the news around Target certainly has the stock under pressure. Other retail stocks like Gap Stock (GPS) are hanging on but the uncertainty over earnings is hurting stocks at this point. Analysts have already reduced their overall revenue outlook to just 6% for the quarter past. Now it is up to stocks to bring in numbers that beat that 6% to get investors interested in pushing stocks higher.
Market Direction S&P 500 Intraday For Jan 10 2014
The market n Friday opened with a quick bounce to just above 1840 and then commenced to sell-off. By the noon-hour the media is buzzing as the market was down to 1832.43 and appeared to be having trouble rebounding. The afternoon saw the market push back higher. By 3:00 PM the market direction was back up breaking through 1840 which has been a stiff resistance barrier for a few days. The market closed into positive territory and held above 1840. Again a bullish sign for stocks.
Advance Declines For Jan 10 2014
While the market direction may have seemed weak over 70% of stocks were advancing by the close versus 28% declining. There were 213 new 52 week highs on Friday versus 74 new lows.
Market Direction Closings For Jan 10 2014
The S&P closed at 1842l37 up 4.24. The Dow closed at 16,437.05 down 7.71. The NASDAQ closed at 4174.66 up 18.47.
The IWM ETF closed at $115.52 up 63 cents and easily within striking distance of the old all-time high of $115.97
Market Direction Technical Indicators At The Close of Jan 10 2014
Let’s review the market direction technical indicators at the close of Jan 10 2014 on the S&P 500 and view the market direction outlook for Jan 13 2014.
The most important support line in the S&P 500 is still at 1750. That support line is holding the market direction up at present and that has not changed. The second support level of 1780 is light support followed by third band of even lighter support at 1800. The market direction today held above the 1840 level into the close. The long-term moving averages are continuing to look strong here for stocks.
For Momentum I am using the 10 period. Momentum has been the best indicator over the past two months, replacing MACD as the most accurate indicator. Momentum is positive but lower on Friday. With a reading of 100.02 it is more neutral than up or down.
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 sell signal on Jan 8 2014 which was confirmed on Jan 9. That signal continues to point to stocks moving lower.
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 pointing to the market direction moving up.
Rate Of Change is set for a 21 period. The Rate Of Change is positive for the 15th day and has turned back up.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is signaling that the market direction is neutral.
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 was again pointing to up for what is now the fourthday.
Market Direction Outlook And Strategy for Jan 13 2014
The market direction continues to drag itself sideways. Right now though there is no technical damage being done to this market. The uptrend remains intact and could resume at any time. The weakness we have seen since the start of January has been minimal and most of the time, the dips are being bought by investors.
The advance decline ratio in general supports a move higher for stocks. The number of new 52 week highs has continued to outpace the new lows since the start of the year. With IWM back ready to challenge its all-time high, this is a positive for the bulls.
Meanwhile the technical indicates are somewhat mixed. MACD issued a clear sell signal and Momentum is posed to fall negative. The Slow stochastic is pointing to neutral and has a very slight bias to down. Meanwhile the Fast Stochastic, Ultimate Oscillator and Rate Of Change are all pointing to higher prices shortly for stocks.
There is no general consensus among the technical indicators. Three are pointing higher for stocks. Two are pointing lower for stocks and one is neutral. On Friday though stocks tried a recovery in the afternoon and managed to push both the S&P, NASDAQ and IWM ETF higher into the close. The DOW came close. I think investors will try again on Monday.
For Monday I am expecting the S&P will end higher than it starts. In between I am expecting much the same as what we have seen so far this year. I won’t be surprised if there is a dip in the morning as has been the case since the start of the year. However I do believe investors will push stocks higher into the close. It may not be much higher but I think we will see another positive close on Monday.
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