The outlook for Friday was for stocks to keep a bias to the downside as indicators are pointing to a change in direction.
S&P Index Close
On Friday the day opened with an instant drop at the start of the day which set the mood for the rest of the day. The morning saw the S&P try to stabilize around 2100 but that failed by early afternoon and the S&P broke to the 2090 level. The final 45 minutes of trading saw stocks push back to close down 0.92% with a loss of 19.41 points to 2096.07.
Dow Jones Index Close
The Dow Jones opened lower as well and tried to rally which by 10:30 has the Dow back to 17,925. The rallied failed though and stocks by 2:30 were down to 17,812.34. A rally in the last hour of trading cut the loss to 0.67% for a drop of 119.85 points to close at 17,865.34.
NASDAQ Index Close
The NASDAQ had the worst loss of the day beating the other two major indexes with a drop of 1.29%. The NASDAQ fell 64.07 points to close at 4894.55.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – June 10 2016
Stock Market Outlook: Chart Comments:
The S&P reached the 20 day simple moving average (SMA) today and then bounced back to close above it. The closing candlestick is bearish for Monday.
The SPX continues to be led by the 50 day and then the 100 day both of which are rising which is an up signal for stocks. Overall the market is now set up as it should be with the 50 day, following by the 100 day followed by the 200 day. The market was unable to hold the 2100 level and after four days it closed back below it.
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 resistance which as we saw today, continues to keep the market advance well in check.
Very light support has been built around 2090.
2075 is light but better support. Below that is 2050 which is light support.
There is also light support at 2025.
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 but is falling and ready to turn negative on Monday.
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 May 25. The strength of the buy signal was eroded on Friday and is on the verge of a sell signal.
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 falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and falling which indicates the present rally has run out of steam.
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 overbought and has a sell signal in place for Monday.
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 is also overbought and it too has a sell signal for Monday.
Stock Market Outlook for Tomorrow – Monday Jun 13 2016
For Monday the technical indicators are pointing to more downside for stocks. Even the positive indicators took quite a hit on Friday with the sell-off.
The chance of the UK leaving the European Union is creating an air of uncertainty which investors hate. This combined with the Fed announcement on interest rates due out on Wednesday are working together to keep investors on edge.
Monday looks like a weak opening and then possibly a rally attempt before more downside action. Overall Monday appears negative for the close.
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