Today after two days of heavy rallying the market took a breather. By the close of the day a lot of analysts who yesterday were bullish, had once more turned bearish. I think it is too early to tell or to call an end to the rally. The rally today hit the highest level intraday this year but earnings were not as strong as expected from Wells Fargo which is holding more oil and gas company debt than the other big US banks. Wells Fargo Stock closed down half a percent at $48.79.
Oil moved lower ahead of the OPEC-Russia weekend meeting and more and more investors and analysts determine that any deal, if there is one, won’t really work.
S&P Index Close
The S&P made a new 2016 high intraday when it touched 2087.84 but it was unable to hold this high and closed up 0.36 points or basically unchanged. I didn’t trade any Spy Put Trades which was perhaps a mistake as there was a nice pullback from the opening until 10:00 AM and from the 1:00 PM high to the close would also have been a great trade. A noted a number of investors did make those trades so my congratulations to those observant investors who saw the trades unfold.
Dow Jones Index Close
The Dow Jones closed up 18.15 points to 17,926.43 but basically followed the S&P price movements all day.
NASDAQ Index Close
The NASDAQ closed down 1.53 points to 4945.89. A number of tech stocks were hammered, but one big name was Seagate Technology Stock (STX) which fell 20.10% for a huge $6.82 plunge, closing at $27.11 on the back of lower third quarter revenue guidance.
Seagate Stock Collapse
Seagate stock is now trading at prices from 2012, having fallen from its 52 week high of $60.09 to today’s close of $27.11 for a loss of $32.98 or 55%. I would expect a bounce on Friday but then a retest of the $27.00 level within a couple of days early next week. The bounce could be worth trying to trade but I have no plans to sell options, either puts or calls at the present time in Seagate Stock. The question now is whether the company can maintain the dividend which is $2.52 for a yield of 9.30%.
Seagate Stock Back to 2012 Prices
Western Digital Stock
Meanwhile Western Digital Stock (WDC) was also down by 6.65% in sympathy with Seagate Stock. It closed today at $41.82 nearing its 52 week low of $38.64. The 52 week high for Western Digital Stock was $102.07. Today’s close marks a decline of $60.52 for a loss of 59% over the past 52 weeks.
Stock Market Outlook – Advance Decline Numbers
Volume was down again on Thursday at 3.76 billion shares traded. Of those shares, 45% were to the upside while 53% was to the downside. 42% of all stocks were rising. New highs were just 75, but new lows were just 3.
The NASDAQ traded 1.6 billion shares with 45% of all trades to the upside and 54% to the downside. New highs were 49 and new lows were 18,
The number of new highs for both the NASDAQ and the S&P point to more weakness the strength. Friday may be weak again. The lack of sustainable, rising new highs shows how narrow the advance remains.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook from Apr 14 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 20 day moving average again on Thursday and at the Upper Bollinger Band.
The Bollinger Bands Squeeze is not looking like it will push the SPX Index higher however the closing candlestick is bearish for Friday and often signals a change in trend.
The 20 day simple moving average (SMA) is moving higher still.
The 50 day moving average is also continuing to turn up and as is the 100 day moving average.
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 is now support.
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 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 sell signal on April 5 which was still active on Thurday but continuing to weaken.
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 rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and starting to rise.
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 up for stocks although you can see a sharp downturn in the signal line. It is overbought.
Stock Market Outlook for Tomorrow – Friday Apr 15 2016
The technical indicators are now 5 to 1 positive for Friday. There are though signs that weakness from Thursday may creep into Friday. The closing candlestick is often a signal of change or a reversal. It does not always happen the following day but usually it happens within a day or two of the signal.
The two stochastic indicators are also showing signals of being overbought and the Fast Stochastic turned sharply down on Thursday although the signal is still up.
Be cautious on Friday although the outlook is still for stocks to push higher. We could see weakness again in the morning to start the day. The close is still expected to be higher but it may be only slightly up and caution is warranted on Friday.
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