Fiday’s Stock Market Outlook was for stocks to stay weak but close on a positive note, even a slight one. Instead stocks stayed weak but closed on a slightly negative note. In other words, the market was flat heading into the weekend of the OPEC-Russia-Iran oil meeting as Saudi Arabia and Russia strive to carve out an oil production cap deal that includes Iran. The problem though is Iran doesn’t want a deal and failed to send any delegates. Saudi Arabia insists that any deal must include Iran. Iran has made it clear they have no intention of joining any accord at the present time. In the long run though these kinds of deals rarely work. OPEC has a history of never living up to any deal they make so why anyone believes this would be any different is difficult to ascertain.
At the time of writing this article mid-Sunday April 17 oil futures are down about 2.75%.
S&P Index Close
The S&P managed to close at 2080.73 down just 2.05 points.
Dow Jones Index Close
The Dow Jones closed at 17,897.46 down 28.97 points.
NASDAQ Index Close
The NASDAQ closed down 7.67 points to 4,938.22.
Seagate Stock At 2012 Valuations
Both Seagate stock and Western Digital Stock continued to decline on Friday. Looking at the 10 year chart of Seagate stock, it is now trading at prices last seen in 2012 and prior to the bear market collapse of 2008 to 2009. At prices this low the stock is bound to rebound this week. The dividend though, I think is bound to be cut shortly.
Seagate Stock 10 Year Chart
Gold – GDX ETF
Gold continues to rally on Friday against the backdrop of further volatility in oil. Despite continually criticism of using Gold to hedge investment positions, the fact remains that Gold at times can be used to profit handsomely and if you look at the 20 year chart you can see the pullback in the GDX ETF last fall through to January this year is at an end for the present time. GDX is now up 79% from a 52 week low of $12.40 which it reached on Jan 19. It was higher on April 12 when it reached 23.06 intraday but even on Friday it still looks ready to push higher. I have not closed my position in GDX at this point but I will be using a stop-loss on Monday of 2%.
GDX ETF – 10 Year to Apr 15 2016
Stock Market Outlook – Advance Decline Numbers
Volume was down again on Friday falling about 100 million shares to 3.69 billion shares traded. Of those shares, 47% were to the upside while 51% were to the downside. 51% of all stocks were rising. New highs were unchanged from Thursday at 75, and new lows were just 6/
The NASDAQ traded 1.68 billion shares with 47% of all trades to the upside and 52% to the downside. New highs were 54 and new lows were 20.
The number of new highs for both the NASDAQ and the S&P continue to show a narrow market advance with more stocks not participating than participating. The lack of new triple digit new highs is also a sign of weakness. However the lack of rising new lows indicates that in general the market remains moderately bullish and that may be all stocks need for the upcoming week.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Apr 15 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 20 day moving average again on Thursday and at the Upper Bollinger Band but the closing candlestick was bearish. Considering that the day was primarily sideways ahead of the Doha conference, it is not entirely evident if the candlestick will actually have any bearing on the market direction as the sideways action was due to investors waiting for the outcome of the conference.
The Bollinger Bands Squeeze is now looking like it will push the SPX Index higher although the closing candlestick is bearish.
The 20 day simple moving average (SMA) is moving higher still.
The 50 day moving average is also continuing to turn up and as is the 100 day moving average.
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 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 falling. For much of last week momentum was continually drifting 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 svery weak on Friday. We could see a buy signal on Monday unless stocks move lower.
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 and rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and moving sideways which indicates that the market direction is still up but prices being paid are largely unchanges.
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 although you can see a sharp downturn in the signal line for the second day on Friday. We could see a sell signal develop on Monday. It is overbought.
Stock Market Outlook for Tomorrow – Monday Apr 18 2016
The technical indicators are now 5 to 1 positive for Monday.
While the inability of the Doha deal to include Iran could make it mute, the market may react negatively on Monday. If it does I believe it will be very short-lived. I cannot imagine many investors believed there would be any kind of workable “deal” on oil cap ceilings that would not be broken within weeks of it being implemented.
Staying cautious on Monday is probably the best outlook but overall the bias remains for stocks to try to move higher. We could see more weakness Monday following the oil conference and then a move higher. On Monday I am looking for weakness but an attempt to close higher, even slightly up. So we can say that the stock market outlook is cautiously bullish for Monday.
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