There is not much that can be said about Wednesday’s market action except disappointing. The rally was definitely strongly underway when the news came at 2:00 PM, in Fed minutes, that they wanted to reduce their balance sheet which is at $4.5 trillion in 2017. As well they indicated they want to end the reinvestment policy but left open whether it would be done gradually or swiftly. The news stunned many investors who unloaded positions ahead of the news. As is always the case in such selling, thousands of other investors also joined in the selling and the indexes lost their rally. The day ended with all indexes negative.
Let’s look at Wednesday’s closing numbers and then take a technical overview the trading.
S&P Index Close
The S&P index ended the day down 7.21 points to close at 2352.95
Dow Jones Index Close
The Dow Jones ended down 41.09 points to 20,648.15
NASDAQ Index Close
The NASDAQ closed down 34.13 points to end the day at 5,864.48
Stock Market Outlook
Chart Comments At The Close:
By the end of trading we were left with a strong bullish candlestick for Thursday. However the market which had been above the 21 day moving average, fell back and down to the 50 day moving average but then bounced off that average. This is a good sign for the bulls.
The market closed just above the important 2350 technical barrier. The 2350 level has been difficult for the S&P to move convincingly above.
The 200 and 100 day moving averages are continuing to climb.
The 50 day and 21 day are moving sideways.
The Lower Bollinger Band is still below the 21 and 50 day moving average which signals more sideways days are ahead.
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and falling.
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. At the close of trading the sell signal remained.
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 falling.
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 signal 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 extremely oversold.
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.
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 a down signal in place by the close of trading. Earlier in the day the signal was UP
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 6 2017
For Thursday stocks should see further weakness in the morning. We could see the markets jump at the open, but I would expect a negative day by the close even if there is a morning rally.
Overall then the outlook is for lower prices but a bounce intraday is expected.
Stay FullyInformed With Email Updates
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)
Market Direction External Links
IWM ETF Russell 2000 Fund Info
Market Direction SPY ETF 500 Fund Info