The market direction outlook for Monday was for weakness but for the market direction to not break through Thursday’s market closing high. This was important to confirm that buyers are still holding stocks going forward and not being shaken out of the market as concern continues over the debt ceiling stalemate. Both the S&P 500 and the Dow Index had to hold their respective closing highs from Thursday to be able to confirm that the market direction up remains intact.
Market Direction Charts For Oct 14 2013
S&P 500 Market Direction
Today the S&P 500 fell to 1692.13 which placed it right at the close for Oct 10, but the hopeful talk out of Washington was enough to keep the market direction from collapsing further and indeed pushed investors back into a buying mood to keep the S&P 500 above both Thursday’s close and Friday’s close. The market pushed back up to 1710.14 at the close. The market is actually very near the all-time highs once again.
Dow Index Market Direction
The Dow also fell but the low was still above Thursday’s close of 15126.07. Once again the Dow did not break the Thursday high. The Dow also picked up steam into the close and managed to close at 15301.26 back above the 50 period simple moving average (SMA). This is another good sign for the market direction to continue to push higher.
At the close of the market today, MACD issued a buy signal on the Dow Index. Every technical indicator pointed to a higher day on Tuesday for the Dow except the rate of change which remained negative. The Rate Of Change is continuing to tell investors that buyers are remaining wary of the market at this time. That was the only negative indication at the close of the Dow today.
Advance Declines For Oct 14 2013
Monday’s advance/decline ratio was not nearly as good as Friday’s. Instead the selling through much of the day, particularly the morning, ended up with 40% of stocks declining and 56% advancing. New highs though were 197 while new lows were 90. Once again the figures continue to show that there is underlying strength in the market. You can tell that investors in general are convinced that once the debt ceiling is resolved, the market direction will break to the upside.
Market Direction Closing For Oct 14 2013
The S&P 500 closed at 1,710.14 up 6.94. The Dow closed at 15,301.26 up 64.15. The NASDAQ closed at 3,815.27 up 23.40.
IWM ETF Record High Close
Meanwhile the Russell 2000 ETF, IWM, rose about half a percent but made another new all-time high closing at 108.22 after reaching 108.35 intraday. This is indeed good news for the small and mid cap ETF which represents 2000 stocks in a variety of industries. Investors are convinced that the market direction in small caps also remains higher. Let’s hope they are right. If small caps pull still higher, the rest of stocks will follow.
Market Direction Technical Indicators At The Close of Oct 14 2013
Let’s review the market direction technical indicators at the close of Oct 14 2013 on the S&P 500 and view the market direction outlook for Oct 15 2013.
For Momentum I am using the 10 period. Momentum on Monday pushed higher into positive territory. With a reading of 101.7 we are beginning to see some strength but it still has a long way to go to reach the momentum of the last rally back in September before the market direction turned back down. The debt ceiling is the problem obviously.
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 today as it did on the Dow Index. The buy signal is not strong which is fine, but on both indexes it needs further confirmation tomorrow. Still this is a good development for the market direction to continue higher.
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 climbing higher, and now is overbought. While this could signal further weakness tomorrow, the Ultimate Oscillator being overbought is good for stocks and this condition can last more than a day or two. Many investors will be drawn into the markets when they see the growing strength.
Rate Of Change is set for a 21 period. The Rate Of Change is positive for the third day which is good, but it is trending sideways not up. This is telling us that investors are continuing to buy but they are nervous and lack conviction to load up on stocks at this point..
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 up and it is now 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 for tomorrow is also up. While it is nearing overbought there is still a lot of room for the Fast Stochastic to push higher before it is overbought to extreme.
Market Direction Outlook And Strategy for Oct 15 2013
There is not a lot of new comments to cover today. The best market direction indicators were that the S&P and the Dow market direction push lower earlier Monday did not break the highs of Thursday and that is important. Then the fact that they closed once again near the highs for today is another good signal. But investors are still at the mercy of politicians and the debt ceiling. Markets remain very nervous. There is tremendous hope among investors that the debt ceiling issue will be resolved and the economy will continue to expand. Investors in general are an optimistic bunch but if they get disappointed, watch out.
As the debt ceiling stalemate has continued but the market direction has continued to recover this is bolstering investors and analysts. Indeed many analysts have begun to write and discuss how a default might actually not be that bad for the markets. Many are reflecting that it could almost be a non-event in the end. I disagree. I think the knee-jerk reaction of investors will be to sell stocks and move to cash and take a “wait and see” approach if there is no resolution to the debt ceiling stalemate. In the event of a default I think investors will “sell now and ask questions later”. At the outset the market could lose the recent gains which means a drop in the Dow of more than 300 points. This will draw more nervous investors into the selling and probably see the Dow retest the 200 day moving average at the least.
I am not expecting the politicians to continue the stalemate forcing a default. But it is important as an investor to not simply dismiss as impossible such an event and certainly to believe that a failure of a resolution would be a “non-event” for stocks I believe is a serious mistake.
For Tuesday then I am expecting weakness but as long as there is no “bad news” on the debt ceiling front, I am expecting more green as the day moves forward. There is great hope from investors that politicians will resolve this issue and another crisis will be put behind the markets. It really is all about hope right now.
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