The market direction outlook for Monday was for the market to waffle at the 1800 level but close either at it or certainly right around it. The day was actually progressing very well until late in the trading day. Carl Icahn spoke at the Reuters Global Investment Outlook Summit indicating that he is “very cautious” on the stock market, saying he could see a “big drop” coming because earnings at many companies are fueled more by low borrowing costs rather than the strength of management. I am not sure where he got this information but he should have more resources than I. He also was back promoting Apple Stock commenting that he has no plans to walk away from his investment in Apple. Following his comments Apple Stock sold off dramatically. I sold puts at the close of the day for my Apple Stock bi-weekly Put Selling strategy as my last set of puts expired on Friday.
Facebook Stock
The NASDAQ took quite the beating on Friday as many social media and cloud-related stocks were hit. Facebook Stock was down 6.5 percent to close at $45.83. Facebook Stock has a fair level of support sitting at the $36 valuation. At present put premiums are not worth selling that far out in time, but that could change if the stock keeps pulling back.
Twitter Stock
Another social media site, Twitter stock was down 6.46% closing at $41.14. At present Twitter stock has not support levels other than where the IPO was released. At $41.65 Twitter stock has already fallen below its opening day close.
Market Direction S&P 500 Intraday For Nov 18 2013
The 1 minute market direction chart for the S&P 500 below shows how the day progressed. The earning morning bounce beyond the 1800 was quickly sold off and the market direction pushed lower making a typical early morning low. I bought IWM call options at that low using the Trading For Pennies Strategy. Then the market recovered and spent most of the day trying to build support at 1800 for a push above it. Late in the day Icahn’s comments hit the market and investors decided to sell some positions, dropping the S&P 500. The Dow did better managing to close up for the day.
Icahn’s comments really should not come as any surprise to investors. Yet his comments were enough to drop the market and numerous stocks. Investors in general have been unconcerned about the market direction but Icahn’s comments obviously hit home with what a lot of investors have in the back of their minds. While they are bullish, they are worried and Icahn’s comments obviously struck a nerve with a lot of investors.
Advance Declines For Nov 18 2013
Monday saw a reverse of Friday. While the market was doing not too badly for most of the day, Icahn’s comments caused the market to sell. Declining issues outpacing advancing issues with 59% of all stocks declining versus 38% advancing. New highs were up to 288 and new lows 81.
Market Direction Closing For Nov 18 2013
The S&P 500 closed at 1,791.53 down 6.65. The Dow closed at 15,976.02 up 14.32 at another new high. The NASDAQ closed at 3,949.07 down by 36.90 or almost one percent.
The IWM ETF closed at $110.05 down 0.78 or 0.70%..
Market Direction Technical Indicators At The Close of Nov 18 2013
Let’s review the market direction technical indicators at the close of Nov 18 2013 on the S&P 500 and view the market direction outlook for Nov 19 2013.
The most important support line in the S&P 500 at this time in the ongoing rally remains 1750. That support line is holding the market direction up at present.
For Momentum I am using the 10 period. Momentum is positive today and slightly lower.
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 Nov 7 which was not confirmed. The signal of Nov 14 was market up and it was confirmed on Nov 15. Therefore the confirmed direction is 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 is back to being heavily overbought.
Rate Of Change is set for a 21 period. The Rate Of Change is starting to fall.
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 down 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 signaling that the market direction is down and it is extremely overbought.
Market Direction Outlook And Strategy for Nov 19 2013
The market direction spent most of the day flirting with 1800 until Icahn’s comments caught investors by surprise. The fact that the market direction had spent most of the day flirting with 1800 but not breaking through it decisively would also account for the heavier selling after his comments.
Meanwhile the market direction technical indicators are now split. Two are pointing to market direction as shifting to down for tomorrow and mid-week. Meanwhile 4 other indicators are still positive although two are turning lower.
Technically if I weigh the indicators equally they are still in agreement that the direction is higher for stocks. But looking beyond the technical indicators there are signs of weakness at present and the market direction could shift for a few days and move lower.
Overall though the direction is still higher, further out in time. For tomorrow I think the nervousness among investors will remain. With the markets trying to break through 1800 on the S&P and 16000 on the Dow there are bound to be some issues for the market direction. In general though, the market direction up remains intact but tomorrow may see selling pressure.
Tuesday I am expecting sideways action and a bit of selling pressure.
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