To date this month the market direction has been up in the S&P 500 every day except one. So far scary September has been pretty tame. With just two weeks left it certainly looks like this September is not going to go into the history books as the poorest month of the year. My market direction outlook for today was for some weakness to enter the market place with a bias to up. Instead the market was up all day and exhibited little sign of weakness.
Investors today seemed pretty convinced that the scaling back of Quantitative Easing would either be delayed or at the most be announced as a ten billion reduction monthly. On the inflation front, the numbers in today were up just 0.1% in August which is down from 0.2% in July. So far all the money printing is not causing inflation which is something the Fed is obviously trying to create. With no reason in sight for a tightening of monetary policies it should be interesting to see what the Fed announces tomorrow at the end of its two day meeting.
Meanwhile gold fell back closing at $1309.40 and oil slipped $1.17 to $105.42 a barrel due to the easing of tensions over Syria. Watch the gold miners if gold slides below $1300.
Barrick Gold Stock
There is not a lot of support for ABX Stock at the $17.50 level. Once support was broken back at the $30 level the stock is treading in limited support areas. The main support after $17.50 is sitting all the way down at $14 and this is support that goes back more than a few years. The gold miners are being hammered and despite all the analysts who are jumping on the “gold miners are cheap” bandwagon, this is probably the time to stay cautious and stay far out of the money when selling puts and selling naked calls. For investors who are still holding stock a lot higher, it is probably best to continue to sell covered calls on each rise in the stock. The last rise got the stock up to $21 and change back on August 27 and a number of investors wrote me to advise that they had sold covered calls at $22 and $23 into October. These investors are holding stock at $30 but have sold calls each time the stock rises and then puts down at $15 whenever the stock falls. Today for example the Oct 19 $15 puts were being sold for 1%.
Microsoft Stock and Market Direction
Microsoft stock got the market direction up pumped this morning with its announcement of a very fat dividend increase. The news pushed up the stock to $33.47 and then the stock fell. Microsoft stock helped push up the NASDAQ Index market direction which has been pounded lately by the decline in Apple Stock. Today though the morning hype was sold into by investors. Microsoft Stock ended the day at the lows closing at $32.93 up just .13 cents and giving back most of the day’s rally. I still think the $31 put strike is best for those investors like myself who want to sell puts against Microsoft stock but not own any shares.
Apple Stock Is Treading Water
I believe Apple Stock had a bounce back simply because the stock was so heavily oversold. The rally back got the stock almost to $460 but it failed to capture the $65 level. It closed down at $455.32. I am holding the $450 puts and I am pretty sure I will be rolling them again soon. There is not much support at this valuation so the stock probably has more room to the downside before it recovers.
Lululemon Stock Rally Is Fizzling
Lulu Stock has had a nice rally back to support at the $70 level but the rally today looked pretty week as the stock failed to push beyond the Middle Bollinger Band. I think the rally is drawing to a close and I am expecting Lulu stock will pull back and investors should be able to resell the $60 to $65 puts again.
Market Direction Action for Sep 17 2013
Below is today’s one minute chart and the usual pattern from the past trading days is once again appearing. The S&P had a morning gap up and then by shortly before 11:00 a morning high was put in. By the close the market direction was up just beyond the morning high after being higher during the day. The S&P 500 is very overstretched but investors seem intent on setting all new highs. I am not sure it will hold though without more strength.
Advance Declines For Sep 17 2013
Today we had another good day for advancing issues as they were up 65% and declining issues were 33%. New highs were double new lows with 205 new highs versus 102 new lows.
Market Direction Closing For Sep 17 2013
The S&P 500 closed at 1,704.76 up 7.16. The Dow closed at 15,529.73 up 34.95. The NASDAQ closed at 3,745.70 up 27.85.
Market Direction Technical Indicators At The Close of Sep 17 2013
Let’s review the market direction technical indicators at the close of Sep 17 2013 on the S&P 500 and view the market direction outlook for Sept 18 2013.
For Momentum I am using the 10 period. Momentum is positive and turned sideways today indicating buying pressure but no run away market higher.
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 Sep 9 which was confirmed on Sep 10. MACD continued to climb today.
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 very overbought.
Rate Of Change is set for a 21 period. The rate of change is now positive and climbing which continues to point to new buyers are continuing to buy into this rally.
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 to neutral. The reading up is there but the divergence is not wide pointing more to neutral rather than higher. Yesterday though it pointed to down so this is an improvement. 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 extremely overbought and the signal tonight is back to up from yesterday’s neutral reading.
Market Direction Outlook And Strategy for Sept 18 2013
I have looked for the rally to take a breather but that has not happened. When it does it could be a bigger drop than most are expecting. The market direction up is very overbought which you can see is being pointed out by the Market Direction Technical Indicators. Still though most are pointing to the market direction up continuing. Tomorrow brings the Fed announcement after their 2 day meeting and that may give the market a boost up or a push down.
My strategy is unchanged as I am still looking for more Put Selling opportunities and finding them here and there. Aside from this I am busy with the Trading For Pennies Strategy and I will get some more trades written up. Tomorrow then I am still looking for the market direction to turn more sideways with a bias up than strictly up but so far at least, the move up has been the main one to watch.
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