Friday was quite the roller coaster ride. The day opened flat ahead of Fed Chair Janet Yellen’s speech at Jackson Hole. After her comments were made public the market rallied with the Dow up 100 points and the S&P pushing toward 2190. Then the vice-chair Stanley Fischer spoke out and indicated a rate rise as early as September was probably going to happen and there was still probably another rate rise this year. That sunk stocks that fell almost to 2160 before recovery to close down just 3.43 points.
S&P Index Close
The S&P index closed down just 3.43 points after a wild day. It closed at 2169.04 just below 2170.
Dow Jones Index Close
The Dow Jones lost 53.01 points after being higher by more than 100 points earlier in the day. It closed at 18,395.40.
NASDAQ Index Close
The NASDAQ squeaked out a small gain on Friday moving up 6.71 points to 5218.92 after being as high as 5253.39 earlier in the day.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Aug 26 2016
Stock Market Outlook: Chart Comments:
The SPX closed below the 20 day simple moving average (SMA) and near the Lower Bollinger Band. The candlestick at the end of trading was bearish for Monday. Much of the negative move in the index was caused by emotional investors who worried about a September rate increase. The drop to almost 2160 was quickly snapped up by investors which still shows the bull is very much alive.
All the major moving averages are continuing to climb but the move lower on Friday was the lowest drop since the start of the month and may signal trouble for September.
The Bollinger Bands Squeeze is still underway but now looks like it may send stocks lower before it ends.
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 now resistance.
2160 was very light support.
2150 is support
2125 is light 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 negative after Friday’s decline.
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 Friday.
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 negative and falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative to neutral.
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 29 2016
For Monday stocks may start negative or may try to start positive and then turn negative. However I would expect stocks to try to recover late morning or into the midday.
The technical indicators are all negative so the outlook for a positive close on Monday is slim. However not all investors are convinced the Fed will raise rates in September, especially after all the talk about negative rates at the Jackson Hole conference.
For Monday we cannot ignore the technical indicators pointing to more weakness. Monday will most like be choppy but a negative close to the day is likely but this could be just a one or two-day dip for the market.
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