The rally was extended further on Monday despite two global incidents that pushed indexes off their highs. The first was the shooting of the Russian Ambassador in Ankara. The second was a stolen truck in Berlin, driven by whom appeared to be an Afghan “refugee” that was crashed into a crowd of Christmas shoppers, killing 12 and injuring 48 in an act of terrorism. Both incidents worried investors that the violence might spread, especially the killing of the Russian Ambassador.
S&P Index Close
The S&P index ended the day up 4.46 to close at 2,262.53.
Dow Jones Index
The Dow Jones ended the day higher by 39.65 points to 19,883.06
NASDAQ Index Close
The NASDAQ closed up 20.28 points for the best day’s increase closing at 5,457.44 up 0.37%.
Stock Market Outlook
Stock Market Outlook Review of Dec 19 2016
Chart Comments At The Close:
The S&P held the 2250 level again throughout the day on Monday. It remains well within range of pushing to new all-time highs. The chart above shows the index is drifting sideways and moving away from the Upper Bollinger Band. The closing candlestick on Monday is indecisive which often leads to a down day the following day. All the major moving averages are still advancing with the 50 day moving average trying to break higher and move further above the 100 day moving average. The Lower Bollinger Band is still climbing as is the Upper Bollinger Band, both of which are signs of further upside in the present 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 19 2016
Momentum: For momentum I use a 10 period when studying market direction. Momentum is still positive and moving more sideways than up or down. This is a sign of weakness.
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. Monday aw further weakness and the signal is nearing a sell signal shortly unless the market can push higher.
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 moving sideways.
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 up to neutral 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 more unchanged than up or down which would indicate not much price change expected on the index for Tuesday.
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 continuing to try to climb. It indicates the market should move higher shortly.
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 20 2016
Overall the technical indicators still are holding a general bias up but Monday saw further evidence of weakness and a growing bearishness. MACD is on the verge of issuing a sell signal after losing strength for over a week. The Fast Stochastic is still pointing down but the Slow Stochastic is pointing higher which would suggest that we could see some weakness on Tuesday but not much and then a move higher on Wednesday. The Relative Strength Index (RSI) and the Rate Of Change both confirm that outlook.
Therefore while the technical indicators have changed a bit over the past couple of weeks, in general the bias is still for more upside action. Tuesday looks like weakness will still be prevalent but we should see the market continue to grind higher.
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