The outlook for Thursday was for the market to continue its advance but dips should be expected. Quarterly earnings from JP Morgan Chase surprised to the upside and the financial sector jumped higher leading the S&P to another advance.
S&P Index Close
The S&P index hit another new all-time high intraday at 2168.99 before closing up 11.32 points at 2163.75. This was a gain of 0.53%.
Dow Jones Index Close
The Dow Jones Index once again had the best day of the three indexes moving to 18,506.41, the highest historic close for the index. This was a gain of 134.29 points. Intraday the Dow reached 18,537.57. Today’s gain was 0.73%.
NASDAQ Index Close
The NASDAQ rose 0.57% for a gain of 28.33 points to close at 5034.06.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook -July 14 2016
Stock Market Outlook: Chart Comments:
The S&P pushed higher today on thinning volume. This left a second bearish candlestick at the close. The index is following the Upper Bollinger Band higher and is rapidly outpacing the major indexes and the 20 day. The 20 day simple moving average (SMA) is turning sharply higher as it tries to follow the rapid movement of the index up.
This rarely will last. Almost always the index will move back to within range of the moving averages. This has been the best rally since 2011 but it is slowing.
The Upper Bollinger Band and Lower Bollinger Band are moving away from the market which indicates the market will try to push higher.
Stock Market Outlook: Support and Resistance Levels:
These are the present support and resistance levels. These levels have not changed since January 2015.
2100 has become light support.
2090 is very light support.
2075 is also 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 falling for a second day.
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 on July 1. The buy signal was stronger 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 and very overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and and rising indicating higher prices are ahead.
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 extremely overbought and has a neutral signal on the market. It will turn to a sell signal at the first sign of selling.
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 also is extremely overbought and it too is signaling neutral. It is on the verge of issuing a sell signal.
Stock Market Outlook for Tomorrow – Jul 15 2016
The technical indicators are all still strongly positive but three are extremely overbought and the momentum indicator is falling back.
Expect more weakness on Friday although stocks could still close positive especially if bank earnings before the markets open on Friday are generally better than expected among all those who are reporting. Tomorrow then is mixed in its outlook. The market is extremely overbought which almost always sees weakness. The closing candlestick points to weakness for the second day. Three indicators are extremely overbought and momentum is falling for a second day. Bias though remains higher so we have to label Friday, mixed.
Even if the market dips on Friday, and may also pullback further on Monday, these dips are still trading opportunities as the technical indicators point to more upside ahead.
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