I was unable to post my market direction outlook Monday and Tuesday due to my hosting provider making some changes and running tests on the fullyinformed.com websites throughout the day. Everything is now back to normal and speeds have greatly improved. Thanks to all readers for their patience and their kind emails. I am back to writing! Let’s take a quick look at market direction for Wednesday July 24.
Market Direction on Tuesday stayed primarily sideways and the S&P 500 ended with a small loss. The Dow however ended up but the NASDAQ pulled back as well.
Market Direction Closing For July 23 2013
The S&P 500 closed at 1,692.39 down 3.14. The Dow closed at 15,567.74 up 22.19. The NASDAQ closed at 3,579.27 down 21.11.
Market Direction Technical Indicators At The Close of July 23 2013
Let’s review the market direction technical indicators at the close of July 23 2013 on the S&P 500 and view the market direction outlook for July 24 2013.
The Market Direction Technical Analysis is showing that the overbought condition is starting to weaken the uptrend.
For Momentum I am using the 10 period. Momentum on Tuesday continued to slide. It remains positive but the continual erosion is starting to have an effect on investors who are becoming far more cautious.
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 July 5. The buy signal is weaker on Tuesday than it has been in the past few days. Nonetheless MACD is showing that the market direction remains up.
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 remains overbought but no longer extremely.
Rate Of Change is set for a 21 period. The rate of change is positive and is continuing to climb. Often this type of direct movement higher in the Rate Of Change indicator is followed by a pull back, but it can keep climbing for perhaps another day. My own guess is that the climb in ROC is over and we will see some sort of pull back in the ROC indicator.
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 and it is extremely overbought.
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 indicating that the market direction is down and it reflects the extreme overbought condition of the market.
Market Direction Outlook And Strategy for July 24 2013
The market direction is stalling. It is obvious from the market direction technical indicators that the climb higher is having trouble. A number of big name stocks have failed to meet earnings estimates and many of those estimates have been lowered this quarter as it is. This has caused investors to turn somewhat cautious. While none are selling out, many are taking small profits here and there.
I am continuing to look for Put Selling opportunities. On Monday is was McDonalds Stock.
Meanwhile the VIX Index fell today to $12.07 and I bought the October $13 calls for $4.20. I will write that trade up shortly. Tomorrow then I believe there is still enough strength to try to push higher but we could see further sideways action in the market direction.
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