One stock that hurt the S&P on Friday was Oracle (ORCL). A drop of 4% helped to rattle a few nerves on Friday and kept other stocks such as Microsoft, Intel, Western Digital, Qualcomm, IBM, HP and many others lower. With the technology sector under selling pressure, it dragged down Services, Biotech and to a lesser extent Financial stocks. This combined with an overbought condition helped to lead to slight losses on Friday. What was interesting was housing starts coming in far below expectations of 1.23 million at 1.09 million and yet many housing stocks such as Toll Brothers (TOL) moved higher. The dollar was higher and oil moved higher by 1.8 percent.
S&P Index Close
The S&P index ended the day down 3.96 to close at 2,258.07.
Dow Jones Index
The Dow Jones ended the day down 8.83 at 19,843.41.
NASDAQ Index Close
The NASDAQ closed down 19.69 to end the day at 5,437.16.
Stock Market Outlook
Stock Market Outlook Review Of Dec 16 2016
Chart Comments At The Close:
The S&P held the 2250 level all day on Friday and for sometime looked like it might stay above 2265. Considering the selling pressure on Friday the S&P held up quite well and is still looking strong. The 20 day, 50, 100 and 200 days moving averages are all climbing. The 50 day is trying to move further above the 100 day which if it occurred would signal further upside into the end of December.
Both the Upper Bollinger Band and the Lower Bollinger Band are moving higher, indicating that there is more upside in the rally.
Support Levels To Be Aware Of:
2250 is symbolically important but it is not yet support.
There is only light support at 2200. There is also light support at 2195 but better support is at 2180 and then 2150.
Stock Market Outlook: Technical Indicators:
Stock Market Outlook technical review of Dec 16 2016
Momentum: For momentum I use a 10 period when studying market direction. Momentum is still positive and moving sideways but with a reading over 103 it is still strongly positive.
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 buy signal on Nov 9. The buy signal had been losing strength a couple of weeks ago. This week it has been losing strength and that trend continued again 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.
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 is signaling down for stocks and is overbought.
Rate of Change: Rate Of Change is set for a 21 period. This indicator looks back 21 days and compares price action from the past to the present. The rate of change signal is positive and falling.
Relative Strength Index: The relative strength index is set for a period of 5 which gives it 5 days of market movement to monitor. It often is the first indicator to show an overbought or oversold signal. It is positive and while it pulled back on Friday it is more sideways than falling or rising.
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 use for the 1 to 3 month S&P 500 chart when I have it set for daily views. The Fast Stochastic is signaling down and is also overbought.
Stock Market Outlook for Tomorrow – Dec 19 2016
I explained that on Friday if there was a negative close I would be using it to setup more trades as the bias remains up.
At the close on trading on Friday the technical indicators were mixed with one negative, two with down signals, and the remainder still positive and either moving sideways or showing some weakness. On Monday though I am expecting that to end and the market to begin to try to move higher as we head into the final week up to Christmas.
Dips are still opportunities to enter or setup new trades. The outlook for Monday is for some weakness to continue but the market is still holding a bias up.
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