The outlook for Friday was for stocks to remain under pressure and keep a lower bias. Part of that selling pressure on Friday was caused by disappointing quarterly results from Alphabet, Microsoft, Visa and others. Even McDonald’s earnings which best estimates failed to see that stock climb.
S&P Index Close
The S&P had a disappointing session but managed to closed up 0.10 at 2091.58.
Dow Jones Index Close
The Dow Jones which had fallen below 18000 earlier in the week managed to recover 21.23 points to close at 18,003.75, as the index moved back above 18000.
NASDAQ Index Close
The NASDAQ moved lower on Friday but considering just how bad the damage was to stocks like Alphabet and Microsoft, a loss of 39.66 points for the NASDAQ wasn’t all that bad. The index closed at 4906.23.
Stock Market Outlook – Advance Decline Numbers
Volume was lower on Friday at 3.78 billion shares. 68% of all volume by the close was rising but there were just 54 new highs and 9 new lows.
The NASDAQ traded 2 billion shares with 54% of all volume to the upside and 40% to the downside. Advancing issues were 61% while declining issues made up 35%. New highs dipped slightly to 45 and new lows were unchanged at 21. If it had not been for the big tech names that were falling on Friday, the NASDAQ would have closed positive.
While these numbers continue to point to no major decline for the start of the week, they also don’t point to a significant advance. It looks more like a muddle through approach remains for stocks.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook from Apr 22 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 20 day moving average and below the Upper Bollinger Band again on Friday and the closing candlestick was bearish again marking the fourth day of bearish candlestick signals.
The Bollinger Bands are hinting that a move higher may be in the works. Meanwhile the major moving averages of the 50, 100 and 200 day are starting to converge. The 50 day is ready to move above the 100 day which will be a major buy signal.
The 20 day simple moving average (SMA) is moving higher still.
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 is light support. Below that is 2050 which is also light 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 but continuing to drift 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 weak sell signal 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 positive and rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive but moving sideways which indicates prices are not really rising or 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 is signaling down 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 down for stocks and is also overbought.
Stock Market Outlook for Tomorrow – Monday Apr 25 2016
The technical indicators are now mixed with 3 that are negative for Monday and 3 that are positive. Many of the positive signals are trending sideways and not actually climbing. There are hints though that the market could be planning to move higher at the start of the week.
Monday looks like another day of weakness for stocks but more a general sideways action than up or down. The outlook remains cautious for investors and the close could go either way but the bias remains lower to start the week off on Monday.
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