Thursday saw the reaction from the Federal Reserves July minutes. The morning saw the market climb and move above 2186. This brought in sellers who sold the market lower pushing it below 2182 over the lunch hour. The see-saw continued in the afternoon with buyers pushing sellers aside and pushing the market higher again to close at the day’s high of 2187.02.
The Weekly Initial Unemployment Insurance Claims fell more than expected today to an adjusted 262,000 for the week ending Aug 13. This is now the 76th straight week of claims below 300,000, the longest stretch since 1973 when the labor market was a lot smaller. With today’s numbers the labor market is considered to be at full employment, another reason for the Fed to raise interest rates in September.
The US dollar fell again on Thursday hitting an 8 week low against major currencies. This helped push up gold and oil.
S&P Index Close
The S&P index rose 4.80 points to 2187.02 placing the index just 7 points from a new all-time high.
Dow Jones Index Close
The Dow rose 23.76 to close at 18,597.70.
NASDAQ Index Close
The NASDAQ rose 11.49 points to close at 5,240.15.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Aug 18 2016
Stock Market Outlook: Chart Comments:
The SPX closed slightly higher again on Thursday. The closing candlestick was bullish for Friday. As well the index closing above the 20 day simple moving average (SMA) and below the Upper Bollinger Band is also bullish. The Bollinger Bands Squeeze continues and shows not sign of the S&P dropping.
All the major moving averages are continuing to climb.
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.
Stock Market Outlook Technical Signals
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and continues to move sideways although today it is starting to move up.
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 was unchanged on Thursday.
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 moving more sideways than up or down.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and moving lower indicating that higher prices are not about to happen.
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.
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 19 2016
For Friday, the final day of the third week of August, the technical indicators are 4 to 2 positive. Even though the positive signals are continuing to weaken, they are not turning negative which could be a sign that more upside is coming soon for stocks.
For Friday the market still looks weak and with options expiration on Friday we could see a bit more volatility. Volume though, is low. That means the market could move a bit more than expected, either up or down.
At present the market still looks like it will close slightly higher on Friday.
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