For the most part Monday was about investors waiting for any signs from the Jackson Hole conference that the Federal Reserve plans to raise rates in September. Treasury yields fell today and did oil prices. The US dollar rose. Volumes were terrible even by summer holiday standards as most investors sat out the day.
S&P Index Close
The S&P index closed virtually unchanged, down 1.23 points to 2182.64.
Dow Jones Index Close
The Dow dropped 23.15 points to close at 18,529.42.
NASDAQ Index Close
The NASDAQ managed a tiny gain, moving higher by 6.22 points to close at 5,244.60.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Aug 22 2016
Stock Market Outlook: Chart Comments:
The SPX closed almost unchanged on Monday. Another bearish candlestick was left at the close of trading for Tuesday. The past two weeks have seen a slew of bearish candlesticks but the market has continued to move sideways. The index is now down at the 20 day simple moving average (SMA) and the Bollinger Bands Squeeze continues to pressure stocks although there are no strong signals indicating the market direction will move up or down from the present squeeze.
All the major moving averages are continuing to climb signaling the market may break free of the sideways motion to the upside.
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 has fallen to the point where it is neutral.
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 gained strength on Monday but in general it is trading sideways as it continues to keep a slight negative bias.
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 now has a slight up signal in place for Tuesday although it is more neutral than up.
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 weak down signal in place for Tuesday but is also more neutral than down.
Stock Market Outlook for Tomorrow – August 23 2016
For Tuesday stocks may get a bit of a boost from the PFIZER deal for Medivation (MDVN). The purchase will be 21% above Friday’s closing price for Medivation. At the same time, oil looks ready to give back the recent gains. Goldman Sachs warned today that the oil rally is extremely fragile and is not built on fundamentals. This may weigh on stocks on Tuesday.
With Jackson Hole still in the minds of investors and uncertainty around a possible September interest rate hike, stocks may continue to move sideways. Overall the technical indicators are pointing to another day of weakness and a sideways trend but in general the outlook is still higher for the S&P.
Any dip on Tuesday remains a trading opportunity.
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