The outlook for Monday was for stocks to be weak, and a dip was expected. However I expected the dip to be bought into and stocks to close somewhat positive. But on Monday it was not just the overbought condition of the market that put pressure on stocks but also the drop in the price of oil. By the close stocks were at 2024 and then dropped in the remaining few minutes of the day to close lower by 2.55 to 2019.64.
S&P 500
The morning saw the S&P fall to almost 2013 and then recover. The strongest part of the day started over the lunch hour as stocks climbed steadily to reach 20121 before 2:00 PM. A slight drop at 2:00 PM to just above 2018 as quickly snapped up and the S&P climbed higher reaching 2024 by 3:30. The final half hour of trading saw higher volume than much of the day as obviously computer programs were busy trading the final 30 minutes. Into the close stocks dropped back to close down 2.55 points at 2019.64.
Dow Jones Index
The Dow Jones pattern was a duplicate of the S&P with weakness in the first half hour and then a move higher for the rest of the day. The Dow Jones moved as high as 17,257.07 late in the day but selling in the final 30 minutes and especially the final minute sent the Dow lower to close up just 15.82 points at 17,229.13.
NASDAQ
The NASDAQ also duplicated the same pattern as both of the other indexes. The final few minutes of trading sent the NASDAQ lower after reaching above 4760 late afternoon. The NASDAQ closed up just 1.81 points at 4,750.28.
Market Outlook – Advance Decline Numbers
Volume fell again on Monday reaching just 3.48 billion, one of the lowest volume days in 2016. Only 37% of all trades were to the upside while 61% were trading lower. 54% of all stocks on New York were declining by the close. New highs were cut almost in half from Friday with just 41 new 52 week highs and 10 52 week lows.
Market Outlook – Technical Indicators At The Close
Market Outlook: Stock Chart Comments:
The S&P closed above the 200 day moving average again on Monday, however the closing candlestick is bearish.
The 20 day simple moving average (SMA) is rushing higher to meet the 100 day. When it crosses over it, that will provide another buy signal for the market.
The Upper Bollinger Band however is moving sideways while the Lower Bollinger Band is rapidly climbing. This could be the start of a Bollinger Bands Squeeze and should be watched as overall it could be getting ready to send stocks lower.
Market Outlook: Support and Resistance Levels:
These are the present support and resistance levels. These levels have not changed since January 2015.
2100 is resistance.
2075 was light support and is now resistance. Below that is 2050 which is resistance.
Light support is at 2000.
Weak support is at 1970 while stronger support is at 1956 and technically it is more important than 1970 for the market. 1940 is light support as is 1920. 1900 is more symbolic than anything else.
1870 is support. 1840 continues to be support. The 1820 level is light support. The strongest support level is at 1800.
1775 and 1750 are both critical support for the present bull market. While 1775 is important it is 1750 that is the bottom line.
A break of 1750 would mark a severe correction from the all-time high of 2134.72. This would be the biggest correction since the plunge in 2011 of a 20% pullback. A pullback to 1750 from the all-time high would be a drop of 384 points for a decline of 18%. A pull-back of that size would definitely stun investors and bring to question whether the bull market which started in 2009 is finished. From 1750 it is an easy slide to 1600 which was near the market top in 2007.
Market Outlook Technical Signals
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and rising.
MACD Histogram: 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 Feb 16 which continues to be weak on Monday
Ultimate Oscillator: 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 positive and moving sideways as selling pressure builds.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and higher. The signal at the close was a positive 10.42. Although higher readings do happen, a reading athis high is almost always followed by short-term pullbacks and larger than expected dips.
Slow Stochastic: For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic tries to predict the market direction further out than just one day. The Slow Stochastic is signaling up for stocks and is extremely overbought.
Fast Stochastic: 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 up for stocks and is extremely overbought.
Market Outlook for Tomorrow – Tuesday Mar 15 2016
The market outlook for tomorrow, Tuesday Mar 15 2016 is for a possible rally ahead of Wednesday’s Fed Interest rate announcement which is set for 2:00 PM. However signals are becomingincreasing bearish for stocks to be able to push much higher at the present time.
Therefore on Tuesday look for stocks to rally ahead of the Fed’s policy statement on Wednesday and then stocks to move lower.
If stocks move lower on Tuesday and rally on Wednesday following the Fed’s announcement, look for stocks to sell lower following the Fed’s announcement as early as late Wednesday or into Thursday.
For Tuesday then, we can say that stocks could move up but the move is probably short-lived and overall the market will pullback shortly.
Stay FullyInformed With Email Updates
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)
Market Direction External Links
IWM ETF Russell 2000 Fund Info
Market Direction SPY ETF 500 Fund Info