Stocks pulled back slightly on the S&P on Friday while the NASDAQ managed a very small gain. Investors were taken off guard by retail sales figures for July that showed flat purchasing results while July producer prices recorded their biggest drop in almost a year. This brought back all the questions of just how well the US economy is doing and with stocks sitting at all -time highs, investors seemed to take the day off on Friday.
S&P Index Close
The S&P index rose in the morning but when it reached 2186.28 which was within just 2 points of the all-time high, stocks pulled back and the index slipped by 1:00 PM to below 2180. This brought in buyers and the close saw the index back up to 2184.05 for a small loss of 1.74 points.
Dow Jones Index Close
The Dow followed the S&P movement, rising in the morning to 18,606.06 but then falling by 1:00 PM to 18,535,86. That brought in some buyers who pushed the Dow Jones back up to close at 18,576.47, for a loss of 37.05 points.
NASDAQ Index Close
The NASDAQ had the better day, rising in the morning, then experiencing the same 1:00 PM low but recovering to close at 5232.89 up 4.50 points and within reach of the 52 week high of 5,238.54.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Aug 12 2016
Stock Market Outlook: Chart Comments:
The SPX closed almost unchanged on Friday which left behind a bearish candlestick for Monday.
The Bollinger Bands Squeeze is continuing to widen and the outlook now appears for the S&P to push higher out of the present squeeze as it continued to trend along the Upper Bollinger Band and above the 20 day moving average. A slip below the 20 day moving average could signal a change in investor sentiment.
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.
The market has seen both bullish and bearish candlesticks over the past two weeks but overall it continues to grind higher slowly.
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 continues to move sideways but is staying positive.
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 Friday but the sideways movement is keeping the sell signal in force.
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 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 which could easily turn to a down signal. It 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 but you can see in the chart that it could turn down with any type of weakness on Monday.
Stock Market Outlook for Tomorrow – August 15 2016
The technical outlook continues to be mixed but overall the signals are still primarily positive although greatly weakened from a couple of weeks earlier.
For Monday investors should expect more of the same – weakness, choppiness, dips but no sell-off as the market keeps trying to grind its way higher. The bias remains ever so slightly up. Caution is warranted for investors until a clear signal up or down is evident.
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