Market Direction for May 6 was primarily consolidation and the past push to new highs on the S&P, Dow and the NASDAQ. There was not much downward pressure on market direction which surprised me as I had expected more to start off the day. After such a big gain on Friday I would have expected more selling and while there were individual stocks that saw selling pressure the index itself saw only muted selling and the Dow continued to flirt with 15000 but closed down just fractionally.
The late afternoon saw the market direction on the S&P 500 push to new highs and then surrender those highs into the close. This could be a signal that we could see better selling action tomorrow as the market consolidates further. The better signal may be coming from the Russell 2000 which today closed at it’s all time high which is a very strong bullish signal. The Russell 2000 is exhibiting breakout characteristics and continues to push the Upper Bollinger Band. Whether it can continue this bullish sentiment is anyone’s call at this point, but it is still a good sign that any correction at this stage may be only shallow.
Market Direction Closing For May 6 2013
The S&P 500 closed at 1,617.50 up 3.08 points. The Dow closed at 14,968.89 down 5.07 points. The NASDAQ closed at 3,392.97 up 14.34 thanks in no small part to Apple Stock which continues to climb.
Market Direction Technical Indicators At The Close of May 6 2013
Let’s take a moment now and review the market direction technical indicators at the close of May 6 2013 on the S&P 500 and view the market direction outlook for May 6 2013.
For Momentum I am using the 10 period. Momentum is positive and had a slight pullback with today’s market direction activity which was more sideways 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 buy signal on April 26 and the signal remains valid.
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 overbought and almost unchanged from Friday indicating that the market direction up is very overbought.
Rate Of Change is set for a 21 period. Rate Of Change is still positive but down slightly from Friday.
For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic is extremely overbought and surprisingly has changed from a bias to neutral to down 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 also extremely overbought but it indicates that the market direction will be higher on Tuesday.
Market Direction Outlook And Strategy for May 7 2013
A lot of analysts have been busy talking about how the market will be quiet this week. I somehow doubt that. While there are no major events to report, often the markets can surprise when there are no economic events to trade against. On Tuesday at 10 AM we get the Labor Department job openings and turnover survey. On Thursday before the markets open we the Weekly Initial Unemployment Insurance Claims and on Friday around 2 PM the US Treasury releases the federal budget figures from April. There is enough news then to propel the market direction one way or the other.
At this point though I don’t believe there is enough strength on the part of the bears to push the markets lower in any meaningful way. That said, the first full week of May often can set the tone for the month. Let’s keep an eye out and see if the market direction can push higher for most of the week if it does not then the tone may be weakness for the coming summer months.
For Tuesday then, the Market Direction Technical Analysis Indicators are pointing to only a small amount of weakness and for the market direction on the S&P 500 to try to push higher again on Tuesday. The closing today was not overly bullish for the S&P 500 and that could lead to some weakness on Tuesday, certainly to start off the day. I will be looking for weakness and opportunities within my favorite stocks and then look for the market direction to close marginally higher again.
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