FullyInformed.com

Stock Market Outlook for May 19 2016 – Sideways With Bias Lower

May 18, 2016 | Stock Market Outlook

Today was all about the Fed FOMC minutes and investor fear of a possible interest rate increase in June.  The market spent the morning climbing to above 2050. Then early afternoon, the market climbed to 2060 as investors hoped the minutes would should no possible rate increase until the fall at the earliest. Instead at 2:00 PM the report showed a strong desire by the Fed to raise rates in June. Stocks tanked and by 2:30 they had fallen to 2034.49.

This was the low point for the day and investors stepped in to buy. With volume to the downside at its highest level of the day, buyers pushed back and the S&P had two rallies. The first reached 2048.35 by 3:04 and the second rally was into the close, ending the day at 2047.63 for a slight gain of 0.42. Essentially the S&P was flat on the day.

SPX one minute chart for May 18 2016

SPX one minute chart for May 18 2016

S&P Index Close

The S&P closed at 2047.63 on Wednesday.

Dow Jones Index Close

The Dow Jones closed down 3.36 points to close at 17,526.62.

NASDAQ Index Close

The NASDAQ closed up 23.39 points at 4,739.12.

Stock Market Outlook – Advance Decline Numbers

Volume on Wednesday was at 4.1 billion shares.  Of those shares traded 64% were lower by the close and 35% were higher. 64% of all stocks were falling. New highs fell back to 44 and new lows rose to 34.

The NASDAQ traded 1.86 billion shares with 35% of all volume moving lower and 64% moving higher. New highs were lower again though at just 22.  New lows were also lower, down to 55.

The volume improved today but still points to weakness. The weakness levels though are not overly strong but instead point to sideways trends with a bias more to the downside than upside.

Stock Market Outlook – Technical Indicators At The Close

Stock Market Outlook for May 18 2016

Stock Market Outlook for May 18 2016

Stock Market Outlook: Chart Comments:

The S&P closed below the 20 day simple moving average and the 50 day moving average.  It did reach the Lower Bollinger Band and moved slightly above it by the close. The closing candlestick is somewhat neutral for Thursday with no clear bias for a move up or down.

The 100 day has moved above the 200 day moving average which is a longer-term buy signal. The S&P is below the 2050 support level again but well within range of retaking it in any kind of rally.

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 is light resistance. Below that is 2050 which is light 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 slightly negative but trying to climb back to positive.

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 22. The sell signal was weaker again on Wednesday but is still pointing to a sideways pattern rather than a big up or down move for the market.

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 trying to rise.

Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative and falling which indicates prices in general are still moving lower.

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 neutral to up for stocks which matches the closing candlestick’s indecisiveness.

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 signaling down for stocks and is oversold. A slight rally on Thursday could see a buy signal from the Fast Stochastic.

Stock Market Outlook for Tomorrow – Thursday May 19 2016

Technically the indicators are still slanted to negative as they have been for quite a few days. There is always the chance for a bounce back though as investors are still bullish. There is a lot of negative sentiment now, especially after today’s FOMC report. That could be the trigger to push stocks higher.

With a lot of indecisiveness among many of the technical indicators, the outlook for Thursday is still sideways with a bias lower. But remember, there is always the chance for a bounce back rally.

The Walmart earnings which come before the market opens on Thursday could pull the index lower if their earnings disappoint as much as the other big department store retailers have done.


 

Stay FullyInformed With Email Updates

    Your First Name (required)

    Your Email (required)

    Anti-Spam: Please Answer This Math Question

    I will send you a reply to confirm that you want to subscribe before sending any emails.


    Market Direction Internal Links

    Profiting From Understanding Market Direction (Articles Index)

    How I Use Market Timing

    How I Use Market Timing

    Understanding Short-Term Signals

    Various Market Timing Systems

    Market Direction Portfolio Trades (Members)

    Market Direction External Links

    Market Direction

    IWM ETF Russell 2000 Fund Info

    Market Direction SPY ETF 500 Fund Info

     

    Search

    Select to view all results...

    Generic selectors
    Exact matches only
    Search in title
    Search in content
    Post Type Selectors

    Recent Outlooks

    Stock Market Outlook for Thu Mar 28 2024 – Choppy – Dips Likely – But Higher

    Prior Trading Day Summary: On Wednesday investors returned and snapped up stocks that had drifted lower. The SPX bounced at the open and by the close it was up 45 points to close at 5248. The NASDAQ rose 83 points …

    Morning Investing Strategy Notes for Wed Mar 27 2024

    For FullyInformed Members the morning Investing Strategy Notes for Wed Mar 27 2024 discuss the outlook for Wednesday and comments on a possible correction and what it might entail. There are a number of trade ideas outlined including FedEx Stock …

    Stock Market Outlook for Wed Mar 27 2024 – Unconfirmed MACD Down Signal

    Prior Trading Day Summary: I lost my power shortly after the markets closed. Articles this evening will be shorter if I can post any. On Tuesday trading volume picked up as stocks fell for another day. The SPX closed near …

    Morning Investing Strategy Notes for Tue Mar 26 2024

    For FullyInformed Members the morning Investing Strategy Notes for Tue Mar 26 2024 discuss the outlook for Tuesday. As well there are comments on support levels to watch in the SPX for the week. There are a number of trade …

    Stock Market Outlook for Tue Mar 26 2024 – Still Bullish

    Prior Trading Day Summary: On Monday low trading volumes hindered the chance of a positive close. The SPX saw just 3.4 billion shares traded. This matches the volume on last Friday. While poor , it is also bullish as it …

    Morning Investing Strategy Notes for Mon Mar 25 2024

    For FullyInformed Members the morning Investing Strategy Notes for Mon Mar 25 2024 discuss the outlook for Monday and the shortened week ahead of the Easter holiday. There are a number of trade ideas outlined including FedEx Stock (FDX), Nike …

    Stock Market Outlook for Mon Mar 25 2024 – Dip Likely But Higher Close

    Prior Trading Day Summary: On Friday investors took profits ahead of the upcoming shortened Easter week with indexes sitting at all-time highs. On Friday the SPX closed down just 7 points to 5234. For the week the index was up …

    Morning Investing Strategy Notes for Fri Mar 22 2024

    For FullyInformed Members the morning Investing Strategy Notes for Fri Mar 22 2024 discuss the outlook for Friday. There are a large number of trade ideas outlined including FedEx Stock (FDX), Nike Stock (NKE), Lululemon Athletica Stock (LULU),  and more …

    Stock Market Outlook for Fri Mar 22 2024 – Choppy – Dips Possible But Still Up

    Prior Trading Day Summary: On Thursday all 3 indexes closed at new all-time highs for a second straight day. Volumes remained decent but stocks are seeing some selling as investors are taking a few profits with the indexes at new …

    Morning Investing Strategy Notes for Thu Mar 21 2024

    For FullyInformed Members the morning Investing Strategy Notes for Thu Mar 21 2024 discuss the outlook for Thursday following Wednesday’s FOMC interest rate decision and Fed Chair Powell’s news conference. There are a large number of trade ideas outlined including …

    Stock Market Outlook for Thu Mar 21 2024 – Higher Still

    Prior Trading Day Summary: On Wednesday the SPX, Dow Jones and NASDAQ indexes all closed at new all-time highs. Comments from Fed Chair Powell reaffirming 3 rate cuts in 2024 were still “on the table” was all that investors needed …

    Morning Investing Strategy Notes for Wed Mar 20 2024

    For FullyInformed Members the morning Investing Strategy Notes for Wed Mar 20 2024 discuss the outlook for Wednesday and the latest FOMC interest rate decision. There are also a number of trade ideas outlined including Chewy Stock (CHWY), SPY ETF, …

    Stock Market Outlook for Wed Mar 20 2024 – All About The Fed – Bullish

    Prior Trading Day Summary: On Tuesday the morning started with a dip down to 5131 but buyers were waiting for the dip and volumes picked up. Deep dips in a number of big caps like NVIDIA Stock (NVDA) found ready …

    Morning Investing Strategy Notes for Tue Mar 19 2024

    For FullyInformed Members the morning Investing Strategy Notes for Tue Mar 19 2024 discuss the outlook for Tuesday following Monday’s rally and before Wednesday’s latest FOMC interest rate decision. There are also a number of trade ideas outlined including Chevron …