The outlook for Tuesday was for stocks to trend primarily sideways with a slight up bias, ahead of the earnings from Apple which were after hours on Tuesday. As well, investors are a bit on edge ahead of a 2 day Federal Reserve meeting on interest rates in the off-chance the Fed might announce a rate increase earlier than the expected month of June.
Tuesday did see a short but sharp rally at the open which by 10:00 AM had the S&P up to 2096.87. From there the market drifted back down and then turned sideways. Most of the remainder of the day was spent with the index fluctuating around the 2090 level.
S&P Index Close
The S&P managed a slight gain of 3.91 points to close at 2091.70.
Dow Jones Index Close
The Dow Jones also managed a small gain and closed up 13.08 points to 17,990.32 but below 18000.
NASDAQ Index Close
The NASDAQ moved lower again on Tuesday but just by 7.51 points to close at 4,888.28.
Stock Market Outlook – Advance Decline Numbers
Volume was low on Tuesday with just 3.5 billion shares traded. However despite the small index gain by the close, 77% of all volume was moving higher along with 75% of all stocks. New highs picked up to 64 and lows were just 5.
The NASDAQ traded 2 billion shares with 44% of all volume to the upside and 54% to the downside. Advancing issues though outpaced declines with 61% advancing versus 36% declining. New highs rose to 50 and new lows were at 22.
These are rather poor numbers but there is still strength hiding which is evident from the few number of new lows versus new highs. Still, new highs need to be much higher. The S&P needs new highs above 150 to get the market steadily climbing and that looks unlikely at present.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook from Apr 26 2016
Stock Market Outlook: Chart Comments:
The S&P closed below the Upper Bollinger Band again on Tuesday. It is still above the 20 day simple moving average (SMA) but the candlestick at the close is once again bearish. That is the 6 bearish candlestick over the course of last week and this week.
The Bollinger Bands are no longer pointing to higher prices for the index but instead are showing the index as probably sideways.
Meanwhile the 50 day moving average is above the 100 day moving average for a second day and is continuing to climb. This move still higher today for the 50 day confirms the buy signal.
The 20 day simple moving average (SMA) is starting to turn sideways.
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 but is turning back lower.
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 April 22 at the close. That sell signal was confirmed today.
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 falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive but moving sideways..
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 no longer 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 I have it set for daily views. The Fast Stochastic is signaling down for stocks and is also not overbought.
Stock Market Outlook for Tomorrow – Wednesday Apr 27 2016
The technical indicators are still split at the close of trading on Tuesday. 3 indicators have negative signals and 3 have positive signals. This often means a few days of a market drifting sideways but that probably will not occur on Wednesday.
Earnings and/or forward guidance after hours on Tuesday were poor from a number of big cap stocks and that should affect the indexes in general. Those that fell after hours include Apple Stock, Twitter Stock, AT&T Stock, Chipotle Mexican Grill Stock which one analyst labeled as shockingly bad results and Buffalo Wild Wings Stock to name 5. They will negatively impact the S&P on Wednesday.
I am expecting Wednesday to see a pullback in stocks which should push investors to try a rally back attempt which will fail. Wednesday looks weak for the indexes and a lower close should be 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