Wednesday saw the markets hanging on well into the lunch hour. However a sell-off in the Biotech’s once again, unnerved investors and then there was the glut in oil inventory that also sent energy lower. To add into the melee gold dropped to a one month low. Finally, investors are still fretting over a possible September rate hike and most are sitting on the sidelines awaiting Fed Chair Janet Yellen’s speech on Friday from the Jackson Hole conference.
S&P Index Close
The S&P index started the day around 2186 and stayed above 2182 into the lunch hour. Shortly after 1:30 the market began to move lower. When it broke through 2180 at 2:20 and failed to recapture it, sellers moved in and pushed the index all the way down to 2171.25 before it rallied to 2175.55 by the close. The day saw the S&P lose 11.46 points for a half percent loss. The S&P has not had a 1 percent day move either up or down since July 8.
Dow Jones Index Close
The Dow Jones lost 65.82 points for a drop of 0.35% to close at 18,481.48.
NASDAQ Index Close
The NASDAQ which yesterday set a new intraday high, pulled back the most which was natural considering the rally it has had. It fell 0.81% for a loss of 42.38 points to close down to 5,217.69.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook: Chart Comments:
The SPX cclosed lower right at the 20 day simple moving average (SMA). The closing candlestick left a bearish signal for Thursday although over the past couple of weeks there have been numerous bearish signals that did not amount to anything.
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 still in play although it is starting to end. The Lower Bollinger Band is turning down which may indicate that instead of moving up, the S&P may fall lower until it finds some support.
The drop today was deeper than the most recent drop in the S&P but not as low as it was on August 17 when it reached 2168.50.
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 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 stronger on Wednesday.
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 but falling away from an overbought signal.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and now moving lower.
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 a down signal in place.
Stock Market Outlook for Tomorrow – August 25 2016
For Thursday stocks may see a dip at the open and then a bounce back to the 2180 level before more weakness ahead of Friday’s speech by Fed Chair Yellen. The market is looking for clarity on interest rates and I won’t be surprised if even on Friday there is none. This could move the market lower.
The dip is still a trading opportunity until the market breaks 2170 and closes below it twice. Today it reached 2171 and recovered the 2175 level. Investor focus should be on setting up trades unless the 2170 is broken and stocks close below. That would signal caution.
For Thursday weakness should continue but a breakdown below 2170 is not anticipated without the Fed Chair speech first. Thursday should see choppiness and a sideways action.
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