The rally which started with the Fed.s comments on Tuesday afternoon, continued on Thursday although the intraday morning highs were the best rise of the day. By the close of the day, the major indexes closed well off their highs.
S&P Index Close
The S&P opened at 2058.27 leaving a gap open for the start of the day. The high was 2072.21 mid-morning but the close saw about half of the rally given back with the S&P closing at 2063.95 on the day for a gain shy of half a percent at 0.44%.
Dow Jones Index Close
The Dow Jones moved higher in the morning reaching 17,790.11 which was the highest level this year. It then drifted lower over the lunch hour and tried another rally late in the afternoon around 3:30. That brought in sellers who pushed the index lower to close at 17,76.66 for a gain of 0.47% adding n 83.55 points.
NASDAQ Index Close
The NASDAQ matched the gain from the Dow Jones by the close but early in the morning it shot up to 4899.14 before closing down at 4869.29. Still, the rise was 22.67 points for a 0.47% gain.
Stock Market Outlook – Advance Decline Numbers
Volume was lower on Wednesday with 3.6 billion shares traded, about 200 million less than Tuesday’s volume.
By the close 64% of all volume was to the upside and 60% of all stocks were rising. There were 200 new highs, the highest number in months. There were just 7 new lows one of the lowest numbers since September.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for March 30 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 200 day moving average and reached the Upper Bollinger Band during the day. It closed back below the Upper Bollinger Band but that band is turning back up. The closing candlestick on Wednesday is bearish for Thursday. I would not expect any kind of large drop but just weakness and a possible negative close.
The 20 day simple moving average (SMA) is rising higher and has crossed over the 200 day exponential moving average (EMA) which is a buy signal. Shortly we should see the 50 day cross up and over the 100 day if the rally is to gather more strength.
Presently the 50 day simple moving average (SMA) is continuing to turn back up.
The Lower Bollinger Band is moving higher and crossed up and over the 50 day moving average which is another buy signal for stocks.
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 is a bearish sign.
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 resistance but may be about to become 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 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 now has a reading of just 0.79. We could see a sell signal at any time if there is any amount of weakness in the index over the next day or two.
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 rising with a reading of 6.82. This is still a high reading and it indicates that prices are 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 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 overbought. At the close you can see that the Slow Stochastic appears ready to turn back down which would give a sell signal. I would expect only weakness not a sell-off if this should happen.
Stock Market Outlook for Tomorrow – Thursday Mar 31 2016
The technical indicators are showing the market is overbought and somewhat weary of the rally after just two days. The technical indicators are still positive but there are a number of signs that point to weakness on Thursday.
Overall though, the advance decline numbers are strongly positive and point to further gains. The market is into resistance now and will have a much choppier time advancing, but in general the market still looks set to move to 2080 by Friday or Monday next week.
For Thursday look for weakness to appear especially in the morning and a sideways to slightly lower or positive close. I am not expecting a large move down or up on Thursday.
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