Tuesday’s market action is more what I had expected for Monday. The weakness took the S&P down to 2170 which was quickly bought. The rally back though was just to 2176.12 which places the S&P in the center of the 2170 to 2180 range I have written about over the past couple of weeks. The sideways action shows signs of ending shortly.
S&P Index Close
The S&P index lost just 4.26 points to close at 2176.12.
Dow Jones Index Close
The Dow Jones dropped 48.69 points to close at 18,454.30.
NASDAQ Index Close
The NASDAQ loss was also small at 9.34 to close down at 5,222.99.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – Aug 30 2016
Stock Market Outlook: Chart Comments:
The SPX at the 20 day simple moving average (SMA) again. The candlestick was bearish. If you look at the chart above you can see there have been numerous bearish candlesticks. The volume is so light that a large move up or down is having trouble occurring.
The Bollinger Bands Squeeze this evening after the close shows signs of tightening as the Lower Bollinger Band is now reaching toward the daily dips. This often signals the next move will be lower.
All the major moving averages are continuing to climb although the 200 day moving average is starting to turn sideways as the market continues to move sideways.
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 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 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 a neutral outlook for Wednesday.
Stock Market Outlook for Tomorrow – August 31 2016
There is no change in the outlook. The market action is all choppiness with a sideways pattern. The Bollinger Bands Squeeze is starting to tighten with the Lower Bollinger Band moving up. Often this is the start of a change in trend to down which we could see start to develop by early next week or even later this week.
For Wednesday weakness is still with stocks. Volumes are terrible and the market rally is running on fumes. Investors are reluctant to sell but the VIX Index which was around 11.34 in mid-August is up to 13.12 today.
Be cautious. After Labor Day volumes will pick up and institutional investors are either going to take profits or begin to buy. At present levels the upside is probably limited while the downside may have more possibilities. A lot depends on the Fed in mid-September but the VIX is worth watching for any hint that it may move higher.
The outlook for Wednesday Aug 31 to end the month is a choppy day again, with weakneSS and a sideways action that is holding a slight bias to the downside.
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