The market direction outlook for Thursday was for the markets to move sideways and lower. For much of the day the movement was sideways as the market direction tried to hold recent gains in both the Dow and the S&P. But the better than expected GDP number along with the interest rate cut in Europe caught investors by surprise. Investors are concerned that the GDP number means the Federal Reserve will start scaling back the stimulus programs by December or January at the latest. A large part of the present rally was caused by the Fed announcement of not tapering their program just yet. Now the issue has resurfaced to spook investors again.
Tomorrow the markets get the unemployment numbers. If they are even somewhat better than expected, this could push the Fed to begin scaling back in December. That will definitely concern investors. Today then was all about locking in profits from the recent run-up and prepare for the employment numbers tomorrow. Let’s look at today’s Intraday chart.
Market Direction S&P 500 Intraday For Nov 7 2013
The intraday one minute chart below shows the market direction action for Nov 7. In yesterday’s comments I mentioned the gap at 1772 that I expected would get filled today. At the open the market jumped higher and filled that gap. It was unable to push higher though the selling then commenced. There were three waves of selling which you can see in the chart below. Each rally back from the selling failed to make a new high which then resulted in more selling. At the end the S&P 500 closed at the lows for the day.
Advance Declines For Nov 7 2013
Decliners way outpaced advancing issues today. 76% of all stocks retreated while just 22% advanced. There were only 120 new highs and 97 new lows. The number of new highs has plunged over the past several days which was another signal to expect a market direction pull back.
Market Direction Closing For Nov 7 2013
The S&P 500 closed at 1,747.15 down 23.34. The Dow closed at 15,593.98 down 152.90 wiping out all of yesterday’s gain. The NASDAQ closed at 3,857.33 down 74.61 despite Twitter. The IWM ETF fell 1.69% to close at $107.28.
Market Direction Technical Indicators At The Close of Nov 7 2013
Let’s review the market direction technical indicators at the close of Nov 7 2013 on the S&P 500 and view the market direction outlook for Nov 8 2013.
For Momentum I am using the 10 period. Momentum is now negative although it is actually closer to neutral than negative.
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 Oct 14. Since October 22 MACD has been declining. Today MACD issued a strong sell signal on the S&P with a negative 1.02 reading..
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 negative and falling.
Rate Of Change is set for a 21 period. The Rate Of Change tumbled lower today after signaling yesterday that a change was at hand.
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.
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.
Market Direction Outlook And Strategy for Nov 8 2013
The move lower was not unexpected. I had thought it would come on Wednesday and was surprised by the quick move higher but a lot of that move was Fed induced, just as today’s move lower was again a result of the possibility of Fed scaling back Quantitative Easing. The biggest signal yesterday was rate of change which was so high that it was signaling either a big push higher or a sell-off lower.
Twitter Stock TWTR
Despite all the selling, Twitter stock had an exceptional move jumping over 72% to close at $44.90. Personally I have no idea at this point what the stock is actually worth. As my main interest is Put Selling, I have little interest in the stock until a few weeks or months have passed and a trading pattern begins to emerge, but it was quite an interesting day for Twitter stock.
Friday’s Outlook
For tomorrow then the Market Direction Technical Analysis is pretty clear. The market direction will be lower tomorrow. MACD which has been very accurate throughout 2013 issued a sell signal today at the close.
We should see a push back up at the open or in the morning sometime as this is a bull market and a move lower as big as Thursday’s almost always is followed by a rally attempt. Then the selling should re-emerge. I am looking at a variety of stocks after today’s selling and will begin to put back into the market much of the capital I have had out since Oct 19 options expired.
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