It was the drop in oil today along with the knowledge that there will probably never be an agreement among OPEC producers on any kind of oil cap that sent the markets lower. As well each rally was quickly sold into by investors many of whom have been growing impatient to sell at higher levels. Many of the investors I spoke with over the weekend told me they have waited for the S&P to reach 2080 to 2100 to sell out of their positions. Most advised they were not waiting much longer.
S&P Index Close
The day started with a move to above 2073 and then a decline by 11:00 AM. A second rally through the lunch hour failed and the market slid lower by 2:00 Pm moving beyond the lows of the 11:00 AM dip. A third late day rally died within half an hour and stocks moves to the lows of the day. A finally rally in the remaining minutes of the day saw the SPX close at 2066.13 on Monday down 6.65 points.
Dow Jones Index Close
The Dow Jones followed the S&P lower on Monday with the identical pattern of rallies and dips to close down 55.75 points at 17,737 on Monday.
NASDAQ Index Close
The NASDAQ fell slightly more than the other two indexes with a decline of 22.75 points to close down at 4,891.80 for a loss of 0.46%.
Stock Market Outlook – Advance Decline Numbers
Volume was lower on Monday at 3.5 billion shares traded. 73% of all volume was moving lower along with 71% of all stocks. New highs moved lower to 147 while new lows also fell back to just 10.
New highs pulling back over the past two trading sessions is concerning and shows the weakness that is once more creeping into the rally. However the lack of new lows is also of interest and shows there is still buying interest for stocks at the present level.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Apr 4 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 200 day moving average but below the Upper Bollinger Band. The Upper Bollinger Band though is still moving higher which signals the market has more upside ahead.
The 20 day simple moving average (SMA) is still rising higher after crossing above the 200 day exponential moving average (EMA) another sign of further advancing for the index.
The 50 day moving average is continuing to turn up and as you can see in the chart the 100 day is also now turning higher and by the end of the week or next week it could cross up and above the 200 day. This would be a major buy signal if it happens.
The Lower Bollinger Band is moving higher but signs of a possible Bollinger Bands Squeeze are still evident.
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. Overall though, the chart pattern continues to suggest that the market has more upside this week. Today’s closing candlestick was bearish for Tuesday.
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 light support.
Light 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 moving 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 buy signal Feb 16 which now has a reading of just 0.34. A sell signal could be issued at any time especially if the market moves lower on Tuesday.
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, overbought and moving sideways.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive but falling which indicates prices being paid are starting to fall back.
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 extremely overbought.
Stock Market Outlook for Tomorrow – Tuesday Apr 5 2016
The technical indicators are still showing the market as overbought but there are now more down signals. MACD is on the verge of also issuing a sell signal on Tuesday. If oil continues it move lower on Tuesday stocks will pullback again.
The Stock Market Outlook for Tuesday is for stocks to remain weak and move to a bias to the downside.
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