Tuesday was all about Best Buy’s spectacular quarterly results which jumped the stock almost 20% by the close. It was also all about data. Data during the day showed new homes sales soaring and manufacturing slowing. Surveys now pegged the chance of a September rate hike back down to 26% from 50% just last week. Friday Fed Chair Janet Yellen speaks at the Jackson Hole banking conference and many investors are anxious to see if anything concrete comes out of her speech.
S&P Index Close
The S&P index came within less than a point of reaching the all-time high but then moved back down to close up 4.26 points at 2186.90.
Dow Jones Index Close
The Dow rose 17.88 points to close at 18,547.30.
NASDAQ Index Close
The NASDAQ managed another gain on Tuesday rising 15.47 points to 5,260.08. Intraday it set another new high of 5275.74.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – Aug 23 2016
Stock Market Outlook: Chart Comments:
The SPX closed slightly higher on Tuesday but during the day it came within less than a point of the all-time high. This happened early in the morning as investors were jubilant over the Best Buy earnings and the prospects that a Fed rate increase may not happen in September. From the early morning rally though, stocks slipped lower into the close. This left behind another bearish candlestick for Wednesday.
All the major moving averages are continuing to climb signaling the market may break free of the sideways motion to the upside. The Bollinger Bands Squeeze is starting to end with the Lower Bollinger Band starting to turn lower. The index today hit the Upper Bollinger Band before closing below it.
Stock Market Outlook: Support and Resistance Levels:
These are the present support and resistance levels.
The market is trying to build some support at the 2180 level. At present this is extremely light support.
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 was unchanged 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 and moving higher toward overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and now moving sideways.
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 down signal in place for Wednesday although it is more neutral than up or down.
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 for Wednesday and is becoming overbought again.
Stock Market Outlook for Tomorrow – August 24 2016
For Wednesday stocks may be tempted to take a bit of a dip in the morning. That dip though should not be deep and may test the 2180 level again. The market is attempting to build some support at that level. This could be the point from which a rally may start in September after Labor Day.
For Wednesday there are no signs that the market action will change. The outlook is still for more weakness but the bias is still to the upside.
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