The outlook for Friday was for weakness and a lower close following Thursday’s drop which gave back the big rally on Wednesday. In general Friday was actually a poor day for stocks. The morning saw the bounce that was described in the stock market out from Thursday’s close. The bounce took the index to 2060.63 but from there the market was unable to push further. Most of the remainder of the day saw the market moving sideways. Near the end of the day the market fell to 2041 but managed to close at 2047.60 just above the important 2045 level which was the initial level of the Fed’s induced rally. 2045 remains important on Monday.
S&P Index Close
The S&P closed up 5.69 points to close at 2047.60.
Dow Jones Index Close
The Dow Jones closed up 35 points to 17,576.96.
NASDAQ Index Close
The NASDAQ closed up just 2.32 points to 4850.69 on Friday.
Stock Market Outlook – Advance Decline Numbers
Volume was lower on Friday reaching just 3.35 billion shares traded. Of those shares 73% were to the upside and new highs did reach 97 with new lows at 16.
The NASDAQ was poorer at 1.5 billion shares traded with 53% of all trades to the upside and 45% to the downside. New highs were just 28 and new lows 29. These numbers from the NASDAQ keep advising investors to stay cautious.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Apr 8 2016
Stock Market Outlook: Chart Comments:
The S&P closed at the 20 day moving average but above the 200 day moving average.
The Bollinger Bands Squeeze is now underway and the market still looks like it may pullback into the squeeze. The Lower Bollinger Band is ready to cross over and above the 200 day moving average which could be bearish and should be watched.
The 20 day simple moving average (SMA) is still rising higher after crossing above the 200 day exponential moving average (EMA).
The 50 day moving average is continuing to turn up and as you can see in the chart but the 100 day which was turning up is now turning sideways.
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.
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 resistance.
Better 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 moving sideways.
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 on April 5 which was stronger again on Friday.
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.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and moving sideways indicating that prices are fairly unchanged from Friday’s trading.
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 down for stocks.
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.
Stock Market Outlook for Tomorrow – Monday Apr 11 2016
The technical indicators are now 4 to 2 on the downside. There are three sell signals in play and the Ultimate Oscillator joined their ranks on Friday with a negative reading by the close of trading.
There are 2 positive signals remaining and both are very weak as they cling to stay positive.
The closing candlestick on Friday is often bullish for a rebound rally that could last a day or two. If that fails to happen, the S&P will pullback to at least 2030 within a couple of days at the latest.
The outlook for Monday then is for continued weakness with a bias lower for stocks. For much of the day though, look for stocks to try to stay positive ahead of the earnings announcement from Alcoa which unofficially kicks off earnings season on Monday after markets close.
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