Tuesday saw the S&P gain the rally that was lost on Monday. Much of the rally was caused by the rise in the price of crude to its highest level of 2016. While the morning got off to a shaky start thanks to Alcoa’s disappointing earnings, along with a gloomy report from the IMF on global economic growth, investors shrugged off these concerns early in the day and pushed the index back above 2060.
S&P Index Close
The S&P closed up 19.73 points to 2061.72 for a gain of 0.97%.
Dow Jones Index Close
The Dow Jones closed up 164.84 points to 17,721.25 for a gain of 0.94%.
NASDAQ Index Close
The NASDAQ closed up 38.69 points to 4872.09 for a gain of 0.80%.
Stock Market Outlook – Advance Decline Numbers
Volume rose by 670 million shares to 4.23 billion. Of those shares 85% were to the upside by the close along with 76% of all stocks. New highs were just 110 however, a gain of just 6 from Monday and new lows were at 13.
The NASDAQ traded 1.7 billion shares traded with 67% of all trades to the upside and 32% to the downside. New highs were just 31 and new lows rose to 32.
Whiletoday’s rally was great to see, the advance decline numbers still point to there being an underlying weakness in the market. Breadth is poor despite today’s jump in volume and the advance remains fairly narrow.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook from Apr 12 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 20 day moving average again on Tuesday and above the 200 day exponential moving average (EMA).
The Bollinger Bands Squeeze is still gaining traction as you can clearly see in the chart. The Lower Bollinger Band is moving higher and has pushed above the 200 day exponential moving average (EMA) while the Upper Bollinger Band is now turning sideways. The Bollinger Bands Squeeze looks to be signaling down for the index despite today’s move higher.
The 20 day simple moving average (SMA) is starting to turn lower after crossing above the 200 day exponential moving average (EMA).
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 bullish for Wednesday.
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 trending sideways.
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 still active on Tuesday.
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 but rising.
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 up 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 up for stocks.
Stock Market Outlook for Tomorrow – Wednesday Apr 13 2016
The technical indicators are now 4 to 2 positive for Wednesday. The big rally today on the back of oil’s rally may face some weakness on Wednesday when JP Morgan earnings are released before the markets open. As well oil’s rally turned negative early Wednesday morning which may also affect stocks.
If the earnings are terrible from JP Morgan, the market will most likely move lower. At the same time though the technical indicators are pointing to stocks continuing their gains for another day.
For Wednesday then, we have a mixed stock market outlook with a bias to the upside.
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