The stock market outlook for the second week of May definitely followed the historic pattern.
The sell-off in department stores this week pressured all three major indexes to close down for the week.
The S&P and Dow Jones indexes closed below their respective 50 day moving averages. This is a bearish sign.
The NASDAQ meanwhile is still below all 3 major moving averages. Let’s take a look at the action in all three indexes from the second week of May before looking at the upcoming third week and what investors should prepare their portfolios for.
SPX Stock Market Outlook – Second Week of May 2016
Even though the week seemed strongly negative, the S&P only fell a modest 10.94 points for a loss on the week of 0.53% or half a percent. The S&P opened on Monday at 2057.55 and closed on Friday at 2046.61. Two important events this week from a technical aspect was the S&P closed below the 50 day moving average on Friday which is bearish and the 100 day moving average finally moved back above the 200 day moving average which is bullish and a major buy signal on the S&P.
Stock Market Outlook: Second Week Of May 2016
Dow Jones Stock Market Outlook – Second Week of May 2016
The Dow fell 1.39% for the week. Monday saw the Dow open at 17,786.13 and by Friday it was at 17,535.32 for a loss of 247.44 points. The Dow was the worst performer this week.
The Dow Index also closed below the 50 day moving average which is bearish, but the 100 day is still trending higher above the 200 day. With all three indexes back where they belong, basically, the 50, 100 and 200 in their proper sequence, the Dow has a buy signal still in place.
Stock Market Outlook – Dow Jones second week of May 2016
NASDAQ Stock Market Outlook – Second Week of May 2016
The NASDAQ fared better than the other two indexes closing down on the week by a very modest 0.39%. The NASDAQ opened the week at 4736.35 and closed the week at 4717.681 for a loss of just 18.67 points on the week. The NASDAQ though continues to trend below all three major moving averages. As well, in the chart I have marked two key aspects of the present pattern. At point A on May 3 the 50 day moving average crossed up and over the 100 day moving average which is a buy signal. On Friday marked as point B, the 50 day is at the 200 day moving average and trying to push above it. That too will be a longer-term buy signal when it happens.
Stock Market Outlook – NASDAQ Second Week Of May 2016
Keeping Stocks In Perspective
The media was filled with doom and gloom by Thursday and by Friday, the analysts were turning bearish. Studying the week however we can see that once again losses were mild, especially on the S&P and NASDAQ. Instead what we are seeing is another small decline in the indexes but overall the trend remains for the indexes to stay in a trading range.
Department Store Retailers Hammered
The big news this week was the hammering of department stores. With earnings coming in soft for the latest quarter by Macys on Wednesday, the stage was set for the end of the week to be poor.
While Macys was being crushed, Kohls and Nordstrom added to the woes with their own disappointing results. Analysts pointed to the poor performance of the quarterly numbers from the Department Store retailers as proof the consumer was tapped out and the economy was headed to recession.
This sentiment seemed to hold sway as investors dumped stock on Wednesday, Thursday and Friday. However April retails sales numbers actually jumped 1.3% marking the biggest jump in a year! This seemed to confound analysts who were at a loss to explain the disappointing results from ….. the rest of The Week Ahead article is for FullyInformed Members.
Stock Market Outlook – The Week Ahead For The Second Week of May 2016
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