The outlook for Wednesday was for stocks to remain weak and the index move slightly lower. Overall the day actually wasn’t too bad considering the tumble in some stocks like Apple and Twitter. As well the Fed’s policy meeting ended with the Fed giving very broad information that basically did not leave investors with anything concrete in the way of signals on interest rates. After the meeting the odds of a June rate increase was almost unchanged by most analysts.
S&P Index Close
The S&P dipped in the mid-morning which was anticipated but failed to break 2082. This brought in some buyers which staged three rallies. One which lasted to 2:00 PM. A second that tried to jump-start the market to move higher short after 2:PM and a third that by 3:00 PM had the index pushing toward 2100 with a high of 2099.89. The last two rallies came after the Fed policy meeting indicated a “steady as she goes” broad outlook on interest rates. The S&P closed up 4.35 points to 2095.15.
Dow Jones Index Close
The Dow Jones moved back above 18000, rising 51.23 points to close at 18,041.55.
NASDAQ Index Close
The NASDAQ moved lower but that had to be expected. It closed down 25.14 points to 4,863.14.
Stock Market Outlook – Advance Decline Numbers
Volume picked up once the Fed policy meeting ended and the day saw 4.1 billion shares traded. There were 99 new highs and just 7 new lows. By the close 75% of all volume was to the upside and 68% of all stocks on New York were rising.
The NASDAQ traded 2 billion shares but even though only 51% of that volume was to the upside, there were 73 new highs and 19 new lows.
These are better numbers and point to further advances being possible. The new highs for both the S&P and NASDAQ are the best so far this week and are showing far more strength.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – Apr 27 2016
Stock Market Outlook: Chart Comments:
The S&P closed below the Upper Bollinger Band again on Wednesday but the closing candlestick was bullish for the first time in 6 trading days.
The 20 day simple moving average (SMA) continued to climb and the 50 day simple moving average (SMA) is rapidly gaining on the 200 day and could cross over it by early next week. This would mark another major buy signal.
The Bollinger Bands are still trending more sideways than up which points to stocks still moving sideways rather than higher.
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 still falling.
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 on Tuesday but was weak on Wedneday.
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 starting to move lower.
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 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 up for stocks and is also not overbought.
Stock Market Outlook for Tomorrow – Thursday Apr 28 2016
The technical indicators are mixed further on Wednesday after the close. The two stochastic indicators have turned back to up for the market direction. The only negative signal is from MACD and it is a very week down signal. All the other indicators are weak, just like the market in general, but are still clinging to being positive.
There are more signals pointing to the market trying to push higher on Thursday than lower. The closing candlestick, while bullish, is preceded by 6 bearish signals which means there is more bearishness than bullishness for Thursday.
However the stochastic indicators are turning back to the bullish side and with both pointing up, this adds more strength to the outlook for stocks to try to push higher.
On Thursday then, the odds of stocks moving higher is greater than lower. The outlook then, is for stock to remain under pressure but higher by the close.
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