The outlook for Monday following Friday’s rout was for a bounce back for stocks. We got that bounce today, part of which was the result of Federal Reserve board member Lael Brainard’s comments on continuing to not raise rates just yet. Meanwhile JP Morgan Chase CEO, Jamie Dimon called on the Fed to raise rates a quarter of percent now and get on with it. Even Republican Presidential candidate Donald Trump got into the fray announcing that Fed Chair Janet Yellen should be “ashamed” of what she is doing to the country. He indicated that the Federal Reserve is not “even close” to being independent. All of this certainly made for an interesting day on Monday.
S&P Index Close
The S&P index closed at 2159.04 up 31.23 for a gain of 1.47% of just over 50% retracement of Friday’s drop.
Dow Jones Index Close
The Dow Jones followed the S&P and rose 1.32% for a gain of 239.62 points to close at 18,325.07.
NASDAQ Index Close
The NASDAQ which lost 133.57 points on Friday rose 85.98 points on Monday for a gain of 1.68% and a close at 5,211.89.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook: Chart Comments:
The SPX bounced off the 100 day moving average and closed just below the 50 day moving average.
The candlestick at the end of the day is more neutral than bullish or bearish.
All the major moving averages are continuing to climb although I now turning down. The Bollinger Bands Squeeze is starting to end.
Stock Market Outlook: Support and Resistance Levels:
These are the present support and resistance levels.
The market was trying to build some support at the 2180 level. At present this is now resistance.
2160 is very light support.
2150 is support
2125 is light support.
2100 is 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.
Stock Market Outlook Technical Signals
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative and trying to rise.
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 August 1. That sell signal was unchanged from Friday, on Monday.
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 rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative and rising.
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 signal in place for Tuesday and was unimpressed by Monday’s rally. As it looks out more than a single day, it could be advising that we will see more weakness by mid-week.
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 Stochasticis signaled on Friday that a major bounce might occur. Today it is still signaling lower for the index but it is very close to a possible buy signal.
Stock Market Outlook for Tomorrow – Sep 13 2016
For Tuesday Sep 13 2016 the rally from Monday was nice to see and expected but on Tuesday we get to see if the market can continue the recovery. The technical indicators do not support a further rally but instead point to more weakness and a probable move lower for Tuesday by the close.
Caution remained warranted and the market direction on Tuesday will be an important key to the rest of the week.
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