One aspect of predicting the Stock Market Outlook for the following day is hard big moves up or down will be. Last night is a good example. In the Stock Market Outlook for Wednesday April 13 I wrote that the bias was up for stocks but there was no way to predict that the move up would be as strong as we saw today. Indeed with US retail sales falling in March and US producer prices declining for a second straight month, you might have thought a move higher would have been smaller. But emotions are a huge part of investing and when markets rally or fall hard, they tend to draw in bystanders which builds momentum and can exaggerate a market move. That is part of what we saw today.
S&P Index Close
The S&P closed up 20.70 points to 2082.42 slightly beating Tuesday’s rally for a gain of 1%.
Dow Jones Index Close
The Dow Jones closed up 187.03 points to 17,908.28 which was better than Tuesday’s rally and places the Dow within easy striking distance of 18,000.
NASDAQ Index Close
The NASDAQ closed up 75.33 points to 4947.42 almost double Tuesday’s rally with a gain of 1.55% and within an easy move to 5000.
Stock Market Outlook – Advance Decline Numbers
Volume was down just slightly on Wednesday at 4.18 billion shares traded. Of those shares, 75% were to the upside by the close along with 75% of all stocks. New highs were just 97, down slightly from Tuesday and new lows were down to 7.
The NASDAQ traded 1.95 billion shares with 77% of all trades to the upside and 22% to the downside. New highs were 44 and new lows fell to 17.
It was a great rally and the best two days for moves higher in weeks. Unfortunately though the number of new highs remains elusive for triple digit gains. The rally needs to see triple digit gains of new highs in New York and double today’s new highs in the NASDAQ before the move up can be sustained.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook from Apr 13 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 20 day moving average again on Wednesday and more important, above the Upper Bollinger Band.
The Bollinger Bands Squeeze is not looking like it will push the SPX Index higher.
The 20 day simple moving average (SMA) is turning back up which signals there is more to the rally than two days of gains.
The 50 day moving average is continuing to turn up and as you can see in the chart the 100 day is also starting to turn up.
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.
The closing candlestick is bullish for Thursday.
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.
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 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 sell signal on April 5 which was still active on Wednesday but weakening.
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 but rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and starting to rise.
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.
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.
Stock Market Outlook for Tomorrow – Thursday Apr 14 2016
The technical indicators are now 5 to 1 positive for Thursday.
The morning on Thursday may open a bit weak or may see some selling early morning. The outlook though is for the S&P to move still high than they did today.
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