March was an excellent month for the indexes as they recovered from the losses earlier in the year. The problem now is the inability of the market to push higher. It took the Fed’s dovish comments two weeks ago and again this week, to get the markets “up”. Now into the third day since the Fed spoke on Tuesday, the rally had run out of steam and actually the numbers last night looked like the Fed rally was already over yesterday by the close.
The Unemployment Numbers
Tomorrow we get the biggest stock market mover of them all, the unemployment numbers.
S&P Index Close
The S&P opened at 2059.74 down 4.21 despite rallying to an intraday high of 2067.92. The inability of the S&P to capitalize on Wednesday’s opening jump to above 2070 is unfortunate and may set the stage for the market to pullback.
Dow Jones Index Close
The Dow Jones moved higher in the morning in a very choppy session but by the close it was down 31.57 points to 17,685.09.
NASDAQ Index Close
The NASDAQ was the only major index to manage to squeak through a positive close, ending up 0.55 points higher at 4,869.85 for basically a flat close.
Stock Market Outlook – Advance Decline Numbers
Volume was heavier on Thursday with 3.72 billion shares traded. By the close 50% of all volume was to the upside and 53% of all stocks were rising. New highs declines from 200 on Wednesday to 168 but new lows stayed low at just 7.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook Mar 31 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 200 day moving average but stayed below the Upper Bollinger Band during the day. The closing candlestick on Thursday is bearish for Friday.
The 20 day simple moving average (SMA) is still rising higher after crossing above the 200 day exponential moving average (EMA).
The 50 day moving average is continuing to turn up.
The Lower Bollinger Band is moving higher as is the Upper Bollinger Band although there are growing signs that a Bollinger Bands Squeeze may form by early next week.
The 200 day is still leading the market followed by the 100 day and we should stay aware of that indication, as medium-term it remains a bearish sign.
Stock 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 remains 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.
Stock Market Outlook Technical Signals
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and falling. You can clearly see in the chart that momentum is on a bit of a roller coaster as it rises and then falls only to rise and then fall again. This is indicative of a market having trouble building strength to move higher. Normally this signals that a pullback may occur to allow the market to find buyers and gain stronger momentum to push through sellers.
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 now has a reading of just 0.49. We could see a sell signal at any time if there is any amount of weakness in the index over the next day.
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, overbought and moving sideways.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and falling with a reading of 4.11. This indicates prices being paid for stocks are falling.
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 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 down for stocks and is overbought.
Stock Market Outlook for Tomorrow – Friday Apr 1 2016
The technical indicators are still showing the market is overbought and having trouble building any kind of sustainable momentum.
The most positive indicator are the advance decline numbers and they too pulled back today.
Friday looks to be negative, but a lot depends on the unemployment report, although this time around, I am not sure the unemployment report will be able to change the outlook to higher even if the market does rally for a day. Right now, Friday’s looks negative no matter what the unemployment report shows.
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