In the market outlook for Friday I had written that the market needed to break through 2000 on large volume or it risked falling back. Volume was decent but a bit below average.
The morning saw the S&P break higher at the open punching through 2000. It then built on that break-out above 2000. The lunch hour saw little selling and the afternoon saw the SPX stay well above 2010. As usual, the last hour of trading was the busiest with computer programs rapidly buying positions and pushing the S&P to close at the highs for the day, up 32.62 points for a gain of 1.64% to close at 2,022.19.
The Dow Jones rose not quite as much but recovered the 17,000 level on Friday. It rose 218.18 points for a gain of 1.28% to close at 17,213.31.
The NASDAQ had the best day of the three major indexes moving up 86.31 points for a gain of 1.85%.
Market Outlook – Advance Decline Numbers
Volume fell on Friday to 4.08 billion shares. 84% of all trades were to the upside by the close and 82% of all stocks on New York were advancing.
There were 77 new highs and 10 new lows which still continues to suggest that the market outlook is for stocks to push their way higher to start the week.
Market Outlook – Technical Indicators At The Close
SPX Market Direction Technical Analysis for Mar 11 2016
Market Outlook: Stock Chart Comments:
The S&P broke through the 200 day moving average on Friday and close at the highest level since Dec 31. This puts the S&P into a positive position for 2016 having recovered all the ground lost in the drops in January and February.
The 20 day simple moving average (SMA) is rushing higher to meet the 100 day. When it crosses over it, that will provide another buy signal for the market.
The Upper Bollinger Band however is moving sideways while the Lower Bollinger Band is rapidly climbing. This could be the start of a Bollinger Bands Squeeze and should be watched.
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 was light support and is also resistance. Below that is 2050 which is resistance.
Stronger support was at 2000 which may be support following Friday’s push to 2022.19.
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.
Market Outlook Technical Signals
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and rising.
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 buy signal Feb 16 which was almost unchanged on Friday although still quite weak.
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 positive and higher. The signal at the close was a positive 9.02. Although higher readings do happen, a reading above 9 is almost always followed by short-term pullbacks and larger than expected dips.
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 up for stocks and is overbought.
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 it is set for daily. The Fast Stochastic is signaling up for stocks and is extremely overbought.
Market Outlook for Tomorrow – Monday March 14 2016
The market outlook for tomorrow, Monday Mar 14 2016 shows a market with strong overbought signals still in place. However the strongest signal to consider is the Rate Of Change which has a reading of 9.02. That high a signal reading is almost always followed by weakness and a dip in stocks. This could happen as soon as Monday.
The Bollinger Bands are also moving into a squeeze formation and the remaining indicators re all pointing up, but many are extremely overbought.
The market outlook shows that a dip in stocks on Monday should be expected. It will be bought into and stocks should close the day still higher on Monday.
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