New highs were made in both the S&P and the NASDAQ intraday but light selling, pushed the indexes off their highs. Meanwhile oil slipped on Tuesday which resulted in oil shares declining but other sectors rose including technology.
The VIX Index fell to 11.02 during the day, the lowest level in a year and a clear signal that investors are convinced stocks are going to move still higher.
S&P Index Close
The S&P index rose just 0.85 points to close at 2181.74.
Dow Jones Index Close
The Dow closed closed up 3.76 points to 18,533.05.
NASDAQ Index Close
The NASDAQ rose 12.34 to close at 5,225.48.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Aug 9 2016
Stock Market Outlook: Chart Comments:
The market pushed to a new high on Tuesday before closing almost unchanged from Monday’s close. This left a bearish candlestick for Tuesday.
The Bollinger Bands Squeeze is starting to turn lower which could be a signal that the rally will pullback before moving higher. We should know in a few days.
Meanwhile all the major moving averages are continuing to rise.
Stock Market Outlook: Support and Resistance Levels:
These are the present support and resistance levels.
2160 is very light support.
2150 is support
2100 is light support.
2090 is very light support.
2075 is also light support
Below that is 2050 which is light support.
2025 is better support than 2050 through to 2090.
2000 is primary support.
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 on Tuesday was almost unchanged from Monday.
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 August 1. That sell signal weakened further 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, rising and overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and falling which indicates no change is expected to the upside.
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 has an up signal in place 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 I have it set for daily views. The Fast Stochasticis has a down signal in place for Wednesday and is overbought.
Stock Market Outlook for Tomorrow – August 10 2016
Technically the indicators are still supportive of the rally continuing to move higher. There are though some growing mixed signals pointing to further weakness. Today the Fast Stochastic issued a sell signal. Momentum is not rising and the Rate Of Change is starting to fall.
This is given more mixed signals for the market direction. Wednesday then could see more consolidation and another attempt to reach 2190, but the close could be either slightly positive or negative as pressure to the downside continues to hold back the advance.
Caution is still warranted for Wednesday while the market tries to break to the upside.
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