A plunge in IBM following yet another poor quarterly result, hurt the broader market on Wednesday. The Dow Jones in particular fell deeply because of IBM. The S&P however saw losses hold to a minimum while the NASDAQ early in the day jump to within 68 points of the all-time high. It closed positive.
Let’s review the closing numbers and then take a technical outlook of the S&P.
S&P Index Close
The S&P index ended the day down 4.02 points to close at 2338.17
Dow Jones Index Close
The Dow Jones ended down 118.79 to close at 20,404.49
NASDAQ Index Close
The NASDAQ closed up 13.56 points to end the day at 5863.03
Stock Market Outlook
Chart Comments At The Close:
The most important indicator after the market closed today was the 50 day moving above the 21 day moving average. This is a short-term sell signal. The closing candlestick on Wednesday was bearish for Thursday and continued with the S&P below both the 21 day and the 50 day moving averages. The S&P has been unable to regain both moving averages, staying stalled around the 2350 level.
The 100 day and 200 day moving averages are still climbing but the Bollinger Bands are falling. The Upper Bollinger Band is falling quicker and starting to enter what could be a Bollinger Bands Squeeze.
Stock Market Outlook – Apr 19 2017
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative and moving sideways unable to regain strength.
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 sell signal Mar 7 2017. The sell signal is continuing to stay weak but it is unrelenting in its warnings to investors.
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 negative and moving sideways.
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 has a down to neutral signal still in place.
Rate of Change: Rate Of Change is set for a 21 period. This indicator looks back 21 days and compares price action from the past to the present. The rate of change signal is negative and moving sideways after trying to bounce on Thursday Apr 13.
Relative Strength Index: The relative strength index is set for a period of 5 which gives it 5 days of market movement to monitor. It often is the first indicator to show an overbought or oversold signal. The RSI signal is falling after it too bounced on Thursday Apr 13.
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 use for the 1 to 3 month S&P 500 chart when I have it set for daily views. The Fast Stochastic has an up to neutral signal in place.
Support Levels To Be Aware Of:
The market has light support at the 2350, 2300 and the 2250 level. There is also light support at 2195 but better support is at 2180 and then 2150.
Stock Market Outlook for Tomorrow – Thursday Apr 20 2017
Wednesday’s market issued a number of important warnings signals, but the strongest came from the 21 day falling below the 50 day moving average. This is a short-term sell signal.
All the indicators are confirming this short-term sell signal. There are no positive indicators as of the close on Wednesday.
The two stochastic indicators are both neutral which once again confirms the short-term sell signal. MACD has been unrelenting in its weak sell signal.
A short-term sell signal is often not immediate, but investors should be aware of the signal and stay cautious.
Overall the outlook is for more sideways action on Thursday although I would expect investors to try once again to retake the 2350 level, which should fail based on the technical indicators at today’s close.
Expect further weakness with an outlook continuing to be sideways and lower.
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