The stock market outlook for Wednesday was for stocks to continue the decline. The S&P did move lower and a number of times the index broker through the 2050 support level. By the close though, the S&P closed well off their session lows.
S&P Index Close
The S&P added another 12.25 point loss to the market on Thursday, closing at 2051.12.
Dow Jones Index Close
The Dow Jones fell back 99.65 points to close at 17,651.26.
NASDAQ Index Close
The NASDAQ fell on Wednesday closing down at 4,725.64.
Stock Market Outlook – Advance Decline Numbers
Volume was steady at 4 billion shares traded on Wednesday. Down volume dominated with 72% of all trades moving lower along with 59% of all stocks. There were however 146 new highs and 27 new lows.
The NASDAQ traded 2.4 billion shares. Down volume made up 56% of all trades. 64% of all stocks were declining. There were 36 new highs and 72 new lows.
The stock market outlook from the advance decline numbers are showing some growing concerns over the NASDAQ numbers but the S&P numbers continue to show growing numbers of new highs, which is bullish for stocks.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – May 4 2016
Stock Market Outlook: Chart Comments:
The S&P closed below the 20 day simple moving average (SMA) again on Wednesday. During the day it reached the 50 and 200 day moving averages and bounced off those moving averages. The closing candlestick was again bullish for stocks for Thursday.
The 50 day simple moving average (SMA) is still above the 200 day moving average and the 100 day moving average is ready to move above the 200 day. These are strong buy signals for the market.
The Bollinger Bands are still trending more sideways than up which points to stocks still moving sideways rather than higher. This could change to lower.
As indicated yesterday, stocks need to get back above 2100 quickly or risk losing momentum.
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 support. Below that is 2050 which is also 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 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 on April 22. The sell signal remains strong on Wednesday.
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.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and moving sideways.
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 down for stocks.
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.
Stock Market Outlook for Tomorrow – Thursday May 5 2016
The technical indicators at the close on Wednesday are 5 negative and only 1 still positive. All the indicators are falling which signals that the market may continue to pullback on Thursday.
That said, there are signals that advise the SPX may bounce back on Thursday. These include the advance decline numbers which are strongly bullish. As well the advance decline numbers show that stocks may be set to try to bounce.
For Thursday then, the S&P looks set to try for a bounce but in general the market looks poor at the present time.
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