In general Friday was basically the market hoping in the morning that the Republican Healthcare bill would pass, and then the afternoon watching the bill fail and be pulled.
By the close the market was almost flat for the day. But concern over where the President’s focus may move next and how easy or hard tax reform will be is now front and center for investors.
That means weakness will start the final week of March.
Let’s look at the closings on Friday and then take a technical overview.
S&P Index Close
The S&P index ended the day down 1.98 points to close at 2343.98.
Dow Jones Index Close
The Dow Jones ended down 59.86 points to close at 20,596.72.
NASDAQ Index Close
The NASDAQ closed up 11.04 points to end the day at 5,828.74
Stock Market Outlook
Chart Comments At The Close:
On Friday the index fell below the Lower Bollinger Band and then closed just above it. It is very near to reaching the 50 day moving average. If the futures this evening hold into Monday’s morning trading, the S&P will break the 50 day. The 21 day moving average is turning down and the Bollinger Bands Squeeze is ending with the Bollinger Bands indicating that the move will be lower for the index out of the squeeze.
Finally, the closing candlestick on Friday was negative for the start of this week.
The 50, 100 and 200 day moving averages are still rising which remains bullish. The market is still below the important 2350 level and has been below it for 4 days.
Stock Market Outlook review of Mar 24 2017
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative and falling.
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 Mar 7 2017. At the close of trading on Friday the sell signal is stronger.
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 and 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 has a down to neutral signal in place and is giving oversold readings.
Rate of Change: Rate Of Change is set for a 21 period. This indicator looks back 21 days and compares price action from the past to the present. The rate of change signal is extremely oversold and has a strong negative reading of negative 0.84 . Readings this low are almost always followed by a bounce back.
Relative Strength Index: The relative strength index is set for a period of 5 which gives it 5 days of market movement to monitor. It often is the first indicator to show an overbought or oversold signal. The RSI signal is low at $26.07 but can definitely fall lower before signaling an imminent bounce.
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 use for the 1 to 3 month S&P 500 chart when I have it set for daily views. The Fast Stochastic has a down signal in place and it too is nearing oversold signals.
Support Levels To Be Aware Of:
The market has light support at the 2350, 2300 and the 2250 level. There is also light support at 2195 but better support is at 2180 and then 2150.
Stock Market Outlook for Tomorrow – Monday Mar 27 2017
The technical indicators are all negative and a number of oversold. The Rate Of Change is extremely oversold and almost always we see a bounce from that level.
The futures this evening before Monday’s trading begins is quite negative following the collapse of the Republican Healthcare bill, but with so many indicators negative, the drop on Monday might be short-lived. There are still signals that a bounce can happen and soon. Therefore while Monday looks like a definite down day, we could see selling be muted and if so, that means we should see the market stabilize.
Monday is definitely going to be an exciting day if tonight’s futures are an early indication.
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