The outlook for the market for Monday was for a choppy day of trading but a lower close. Instead the day was choppy on very light volume but investors seemed content to ignore a possible September interest rate increase and move back into equities. Oil moved lower and the dollar rallied. Interestingly the financial sector lead markets on Monday which seems to disagree with the belief of no interest rate increase in September. Wells Fargo was up 2.2 percent and JP Morgan rose 1 percent.
Those investors who were buying on Monday were also buoyed by the Commerce Department’s reports showing consumer spending rose for the fourth straight month in July. With back to school sales in August, investors believe August will continue that trend. Still, the chance of a rate hike has moved from 21 percent to just 30 percent according to CME Group’s FedWatch.
S&P Index Close
The S&P index moved higher by half a percent to close up 11.34 points to 2180.38.
Dow Jones Index Close
The Dow Jones managed a triple digit gain, rising 107.59 points to close at 18,502.99.
NASDAQ Index Close
The NASDAQ managed a small gain of a quarter of a percent, rising 13.41 points to close at 5,232.33.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Aug 29 2016
Stock Market Outlook: Chart Comments:
The SPX closed at the 20 day simple moving average (SMA) and above the Lower Bollinger Band. The candlestick at the end of trading was bullish for Tuesday.
The market opened at 2170.19 and never moved lower. It rose through the rest of the day.
All the major moving averages are continuing to climb and the Bollinger Bands Squeeze is still underway and looks like it may push stocks lower.
The move back to 2180 was a good sign although expected as the market has been working to build support at that level.
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.
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 active and almost unchanged on Monday.
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 but back rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is pretty well neutral which indicates a big drop or rise are not anticipated.
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 an up 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.
Stock Market Outlook for Tomorrow – August 30 2016
Monday’s outlook was for a dip that could be just a one or two-day event. We didn’t get that dip. That means we could see the dip on Tuesday but again, no large drop is expected. The outlook remains exactly sideways once again. The market could end up slightly higher or slightly lower but if you look at the chart above for the S&P index, you can see that basically since July 13 the market has been stuck sideways. Since August 5 it has been stick in a Bollinger Bands Squeeze for one of the longest Bollinger Bands Squeeze periods in more than 3 years.
For Tuesday the outlook is almost unchanged. Choppy, weak and sideways.
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