The outlook for Tuesday was for stocks to remain under pressure and while there was a slight chance of a rally attempt, overall the market would move lower.
S&P 500
The morning saw the S&P drop to its lowest level of the day 2005.23. By the close of the day the S&P was its high closing at 2015.93 for a loss of 3.71 points on the day. For most of the day the S&P drifted sideways ahead of the Fed’s announcement on interest rates, due on Wednesday at 2:00 PM.
Dow Jones Index
The Dow Jones pattern was a duplicate of the S&P with weakness in the first hour. But the Dow managed a gain by the close and was near the day’s high with a rise of 22.40 points to close at 17,251.53.
NASDAQ
The NASDAQ had the poorest showing of all three main indexes. While the morning was the weakest period of the trading day, weakness stayed with the NASDAQ throughout the day and the index closed down 0.45% to 4,728.67 down 21.61 points.
Market Outlook – Advance Decline Numbers
Volume on Tuesday was almost unchanged from Monday with 3.5 billion shares traded. New highs picked up in the afternoon with 50 new highs and just 12 new lows a slight improvement in new highs from Monday. 75% of all volume though was to the downside.
Market Outlook – Technical Indicators At The Close
SPX Market Outlook Mar 15 2016
Market Outlook: Stock Chart Comments:
The S&P closed above the 200 day moving average again on Tuesday but in the morning the drop pushed the index to the 200 day moving average which saw a bounce off that moving average. The closing candlestick was again bearish for the next day.
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 as overall it could be getting ready to send stocks lower.
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 now resistance. Below that is 2050 which is resistance.
Light 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.
Market Outlook Technical Signals
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and falling but in general it has been moving sideways for the past 9 trading days.
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 continued to be weak on Tuesday.
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, overbought 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 drop to 8.11. This is till a high reading and often a drop in stocks follows this high a reading, however today’s Rate Of Change reading was partly affected by the sideways motion throughout the day. We need to see what the Rate Of Change reading is tomorrow for confirmation whether the market can move higher from here.
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 extremely 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 down for stocks and is extremely overbought.
Market Outlook for Tomorrow – Wednesday Mar 16 2016
Today’s technical indicators are not as accurate due to the market action sideways, ahead of the Fed’s announcement on Wednesday. Instead we need to look at what the market may do on Wednesday and then predict Thursday’s market movement.
The market outlook for tomorrow, Wednesday Mar 16 2016 is for the market to rally in the morning ahead of the Fed’s announcement on interest rates at 2:00 PM.
If the Fed announces no rate increase, the markets will probably rally and then fall back. I am expecting a probable positive close on Wednesday, but overall the market is very overbought and has been trending sideways for almost 9 trading days. Normally this is a sign the market outlook up is tired and needs to regroup. That means a pullback on Thursday or Friday is expected.
If the Fed does the unthinkable and announce interest rates will rise in March or April, stocks will pullback immediately and probably retest 2000 either on Wednesday or Thursday. I am not expecting that market outlook to be the case.
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