Friday’s market was all about the unemployment report for March. While the unemployment rate rose slightly to 5%, it was caused by the number of people returning to the labor force and not layoffs. March’s gain of another 215,000 jobs marked the best two-year period for hiring since the late 1990’s. It also has the unemployment numbers back to levels not seen since before the credit crisis hit and the so-called Great Recession began. Yet wage gains remain muted enough to keep the Fed on the sidelines for further interest rate increases at the moment and that was enough to push the market to new highs for 2016 on Friday.
S&P Index Close
The S&P dropped at the outset of trading on Friday breaking through 2045 to reach 2043.98. That brought in buyers who pushed the index back up and managed to close the day just off the high, at 2072.78 up 13.04 for the day for a gain of 0.63%.
Dow Jones Index Close
The Dow Jones followed the S&P higher to close at its highest level of 2016 at 17,792.75, up 107.66 for a gain of 0.61%, just slightly less than the S&P gain.
NASDAQ Index Close
The NASDAQ had the best gain of the day pushing up 44.69 points for a gain of 0.92% to close at 4914.54 a new high for 2016.
Stock Market Outlook – Advance Decline Numbers
Volume was almost unchanged on Friday despite the market making new highs for 2016. 3.76 billion shares were traded. The rise in the indexes though was not reflected in the overall advance decline volume as 51% of all volume was to the upside and 48% to the downside. Advancing issues were actually just 46% with delivers at 50%. New highs though came in at 171 and new lows were still very minor at 13.
New highs and new lows continue to reflect the market being able to push higher, but the advance is not broad-based which remains a concern as the SPX moves higher.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for April 1 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 200 day moving average and at the Upper Bollinger Band. The Upper Bollinger Band is continuing to rise which signals the market has more upside ahead.
The 20 day simple moving average (SMA) is still rising higher after crossing above the 200 day exponential moving average (EMA) another sign of further advancing for the index.
The 50 day moving average is continuing to turn up.
The Lower Bollinger Band is moving higher but signs of a possible Bollinger Bands Squeeze are still evident.
The 200 day is still leading the market followed by the 100 day and we should stay aware of that indication, as medium-term it remains a bearish sign. Overall though, the chart pattern continues to suggest that the market has more upside this week.
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 was light support and is now resistance. Below that is 2050 which is now support.
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.
Stock Market Outlook Technical Signals
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and unchanged from Thursday.
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 now has a reading of just 0.78. A sell signal could be issued at any time unless the daily reading can improve.
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 moving sideways.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and unchanged which supports higher prices.
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 neutral 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.
Stock Market Outlook for Tomorrow – Monday Apr 4 2016
The technical indicators are still showing the market as overbought but there are no down signals evident. Instead the technical indicators have improved slightly although the market remains very overbought.
For Monday the overbought nature of the market, coupled with seller resistance as the S&P tries to advance may slow the advance in the morning or even turn it negative but a positive close is expected on Monday.
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