The Stock Market Outlook for Thursday was for the market to experience some weakness and close a bit lower. Instead stocks moved higher once again on large volume.
Thursday was much stronger than I expected without any dips. From the outset the markets moved higher.
S&P Index Close
The S&P index once again rose throughout the day with no signs of weakness. The SPX added another 28.09 points for a gain of 1.36%. With the index closing at 2098.86, the S&P is well within easy reach of wiping out all the losses from the Brexit “leave” vote.
Dow Jones Index Close
The Dow Jones Index pushed ahead rising 235.31 points for a gain of 1.33%. The index closed near the highs at 17,929.99 scaring the few remaining short-sellers who rushed to close positions ahead of the third day of what has been a powerful rally.
NASDAQ Index Close
The NASDAQ rally started sharply around 10:30 and lasted until the close with the index near the highs at 4842.67 up 1.33% for a gain of 63.43 points.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – Jun 30 2016
Stock Market Outlook: Chart Comments:
The S&P closed all the major moving averages on Thursday. A rather remarkable feat after just 3 days of rallying.
The 20 day simple moving average (SMA) is turning back up which means no sell signal on the market and judging by the way the 50, 100 and 200 day moving average are positioned, the market is on far more solid footings.
The closing candlestick is signaling overbought but still bullish for Friday.
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 still primary resistance and continues to keep the market advance well in check.
2090 was very light support and is now light resistance.
2075 is back to light support
Below that is 2050 which is light support.
2025 is better support than 2050 through to 2090.
2000 is primary support.
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 June 14. The sell signal was declining in strength again on Thursday.
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 but more neutral than either positive or negative. This is a poor reading for the market and normally indicates the rally will stall.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative, rising and ready to turn positive.
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 has a buy signal in place for Friday.
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 I have it set for daily views. The Fast Stochastic has a buy signal in place as well and is overbought.
Stock Market Outlook for Tomorrow – Friday Jul 1 2016
I thought on Thursday stocks would take a breather but with so many investors missing the two-day rally, obviously a lot of them wanted to get into the market today. Technically the indicators are far stronger and turning higher than they were just a few days ago.
The outlook is for stocks to continue to move higher but the Ultimate Oscillator and the Rate Of Change are warnings that the rally may turn sideways for the next couple of days. A consolidation should take place either Friday or at the start of next week. July 1 historically is a strong day for stocks but after 3 strong rally days, we should expect some sideways action on Friday. The bias for the market now though is higher and to retake 2100 either Friday or early next week.
There could be some decent dips to trade against on Friday, but a slightly higher close could still happen on Friday. However after 3 strong days of rallying, a lower close should also be expected. So for Friday then, we have a mixed outlook but the Brexit pullback for stocks, for now, is over and the bears have once again been disappointed. The market bias even with dips, is up.
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