The market direction outlook for Tuesday was for the market direction to be weak but to hang in and move toward some upside as investors cling to hope that the debt ceiling gridlock might end. That failed to materialize and the market direction pushed back lower as the day progressed. The outlook is now for another attempt at a resolution on Wednesday to beat the dealing of Oct 17. Meanwhile the media icontinues to be filled with articles about how this may possibly not be such a “bad thing” after all. Personally I think the media is dreaming. The ratings agencies already are discussing downgrades as the polarization continues.
Market Direction Chart For Oct 15 2013
The S&P 1 minute chart is somewhat interesting for today. The market started off exhibiting the usual signs of setting up a morning low and then rallying higher off those early lows. I did two trading for pennies strategy trades today in the morning. Both of these were off the morning lows. Meanwhile in the afternoon the news out of Washington caught investors with somewhat of a surprise and the market dropped quickly. A rally back failed to capture the previous high and the market fell into the close. At the close the S&P was still off the lows but certainly below the morning lows. The S&P though remains in good shape at this point closing just below 1700.
Advance Declines For Oct 15 2013
On Tuesday, declining stocks outpaced advancing ones. 75% of the volume was negative today with just 23% positive. New highs though still outpaced new lows with 171 new highs versus 102 new lows. Investors are continuing to hope for a resolution tomorrow.
Market Direction Closing For Oct 15 2013
The S&P 500 closed at 1,698.06 down 12.08. The Dow closed at 15,168.01 down 133.25. The NASDAQ closed at 3,794.01 down 21.26. IWM ETF closed down almost 1% at 107.16.
Market Direction Technical Indicators At The Close of Oct 15 2013
Let’s review the market direction technical indicators at the close of Oct 15 2013 on the S&P 500 and view the market direction outlook for Oct 16 2013.
For Momentum I am using the 10 period. Momentum on Monday pushed higher into positive territory. Momentum pulled back hard today and is sitting pretty well at neutral. It won’t take much selling to push it 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 but the confirmation failed to appear today despite MACD closing positive. We need a stronger signal from MACD to confirm the buy signal from Monday.
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 still overbought..
Rate Of Change is set for a 21 period. The Rate Of Change turned negative today although just slightly.
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 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 for tomorrow is also up however the signal if poor and you can see how sharply the momentum to the upside has broken today. This signal from the Fast Stochastic is not something any investor should consider trading against.
Market Direction Outlook And Strategy for Oct 16 2013
Once more investors were disappointed and once more they hope yet again a deal can be reached. The S&P 500 remains above the 50 day simple moving average (SMA) despite the selling and is sitting right near support at 1700. Still though it won’t take much to tumble the market back to the previous lows from the latest correction.
My strategy remains Put Selling but I am holding small contract sizes. Today for example I sold just 5 naked puts on my McDonald’s Stock trade whereas a month earlier I was doing 10 contracts. In this manner I am able to retain cash for any opportunity that could develop should no resolution be reached this week.
Aside from this, after hours Intel Stock had reasonable earnings but revenue was poorer than expected and showed problems in the mobile market which Intel is trying to push their way into. After hours Intel stock is lower but it may end up with a good Put Selling opportunity should investors sell the overall market tomorrow. This will definitely exaggerate the move lower in Intel Stock. I will be watching Intel in the morning as investors cling to Hope – The Sequel for a resolution to the stalemate in Washington.
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