With Weekly Initial Unemployment Insurance Claims on Thursday, coming in at 266,000, investors took this as their cue to push stocks back higher. Today’s Weekly Initial Unemployment Insurance Claims report was the 75th weekly report with initial claims below 300,000. This is now the longest period since 1970 for such impressive gains.
Investors though did not take the numbers as a signal that the Fed could raise rates in September. The majority of investors and analysts believe the Fed cannot raise rates probably before December as global economies continue to show signs of serious weakness.
S&P Index Close
The S&P index rose 10.30 points to close at 2185.79.
Dow Jones Index Close
The Dow closed up 117.86 points to 18,613.52.
NASDAQ Index Close
The NASDAQ rose 23.81 to close at 5,228.40.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Aug 11 2016
Stock Market Outlook: Chart Comments:
The SPX pushed back up on Thursday and made a new intraday high before closing slightly below it. This left a bullish candlestick for Friday.
The Bollinger Bands Squeeze is starting to widen and the outlook now appears for the S&P to push higher out of the present squeeze.
Meanwhile all the major moving averages are continuing to rise and the index is clinging to the Upper Bollinger Band which is a bullish sign.
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 Thursday was almost unchanged and continues to move 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 sell signal on August 1. That sell signal weakened further on Thursday but has managed to hold throughout the week.
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 a down 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 an up signal in place and is overbought.
Stock Market Outlook for Tomorrow – August 12 2016
The stock market outlook is mixed as low volume is keeping the index stuck in a slow grind higher. Technical indicators are split with all the indicators not changing by much. There are 4 that are positive and two that are negative. However within the positive indicators there are three that could easily turn negative but within the negative indicators, one of them, MACD, could easily turn positive. It is definitely a very mixed picture.
Overall though the outlook continues to be supportive of stocks moving to the upside. Dips are still being treated as opportunities to buy stock. Overall caution continues to be warranted as the indexes decide which way to clearly move, but for Friday the outlook is higher for stocks by the close.
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