The rally Monday morning was nice to see, but the give back was disappointing. It was even more disappointing because oil closed above $40 at the highest level in four months. Part of the reason for the decline was investor concern as earnings unofficial started today after the close. Alcoa reported disappointing earnings and revenue amounts. This will weigh on stocks on Tuesday.
With investors fretting about earnings and analysts loading up the doom and gloom bandwagon, it is hard for investors to pick up stocks for more than a few hours. This cannot build a sustainable rally.
S&P Index Close
The S&P closed down 5.61 points at 2041.99.
Dow Jones Index Close
The Dow Jones closed down 20.55 points to 17,556.41.
NASDAQ Index Close
The NASDAQ closed down 17.29 points to 4833.40.
Stock Market Outlook – Advance Decline Numbers
Volume rose slightly on Monday to 3.56 billion shares traded. Of those shares 62% were to the upside and 37% were being traded lower. New highs were 104 and new lows only 15.
The NASDAQ traded 1.5 billion shares traded with 42% of all trades to the upside and 57% to the downside. New highs were just 37 and new lows 27.
While it is nice to see the new highs push back over 100, none of the above numbers point to a sustainable rally at the present time. That said, none of the numbers point to a steep drop as occurring either.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – Apr 11 2016
Stock Market Outlook: Chart Comments:
The S&P closed at the 20 day moving average again on Monday but above the 200 day exponential moving average (EMA).
The Bollinger Bands Squeeze is now gaining traction as you can clearly see in the chart. The Lower Bollinger Band is moving higher and has reached the 200 day exponential moving average (EMA)while the Upper Bollinger Band is slipping lower. The Bollinger Bands Squeeze looks to be signaling down for the index..
The 20 day simple moving average (SMA) is still rising higher after crossing above the 200 day exponential moving average (EMA) but is beginning to turn sideways.
The 50 day moving average is continuing to turn up and as you can see in the chart but the 100 day which was turning up is now turning sideways.
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.
The closing candlestick is bearish for stocks for Tuesday.
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 is now resistance.
Better 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 only slightly positive and falling.
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 sell signal on April 5 which was stronger again 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 negative and falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and falling which indicates that prices being paid 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 down for stocks.
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.
Stock Market Outlook for Tomorrow – Tuesday Apr 12 2016
The technical indicators are still 4 to 2 on the downside. As well the Bollinger Bands Squeeze is indicating that stocks will fall back. On top of this the index has repeatedly been unable to move higher and is trending sideways with a slow drop in valuations occurring.
The 2 positive technical indicators are both weak and could turn negative shortly.
Alcoa Stock earnings disappointed on Monday after the market closes. This will weigh on stocks on Tuesday. I am anticipating stocks will move lower and close negative on Tuesday. The outlook is unchanged at weakness with a bias lower.
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