Oil surged higher on Monday morning and investors largely ignored the Italian referendum. For most investors in North America, it was a non-event. Treasury yields fell back as many analysts felt that the bond market plunge was overdone. The Dow made another intraday new high as data showed the services sector activity reached a one year high in November. By the close of the day oil had given back much of the day’s rally but it still closed higher both for Brent and West Texas Intermediate.
S&P Index Close
The S&P index ended the day with a gain of 0.58% to close at 2204.71 up 12.76.
Dow Jones Index
The Dow Jones ended the day with a 45.82 advance to close at 19,216.24.
NASDAQ Index Close
The NASDAQ rose 1.01% to 5,308.89 up 53.24.
Stock Market Outlook
Chart Comments At The Close:
Stock Market Outlook end of day review Dec 5 2016
The S&P ended the day Monday wit6h a move back above the 2200 level. The market was higher during the day and gave back about 50% of the rally, but it still closed within reach of the 2205 level which was bullish. The closing candlestick on Monday is often bearish for the following day. You can see in the chart that all the major moving averages are still climbing and the 20 day is rapidly advancing. However the Upper Bollinger Band had turned lower and is given an indication that it will push lower. The Lower Bollinger Band has turned up and is crossing above the 200 day moving average which is bearish, when followed by the Upper Bollinger Band turning lower.
Stock Market Outlook: Technical Indicators
SPX technical indicators review for Dec 5 2016
Momentum: For momentum I use a 10 period when studying market direction. Momentum continues move sideways but it has not turn 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 buy signal on Nov 9. The buy signal is almost gone by Monday. Any downturn in the market will send a sell signal from MACD at the present time.
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 still signaling down and shows the market as extremely overbought.
SPX technical review end of day Dec 5 2016
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 trying to turn back up.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and is continuing to rise. This indicator looks back 21 days and compares price action from the past to the present. The indicator is still rising indicating that higher prices are ahead for the market.
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 but is no longer overbought. The down signal could change to an up signal on Tuesday, if stocks move higher.
Stock Market Outlook for Tomorrow – Dec 6 2016
Technically there are 4 negative indicators and 3 positive indicators. Despite the rally on Monday, the technical indicators are still advising that stocks have more downside available. There are no indication that the downside will be more than just weakness such as we have seen over the past several days.
Therefore on Tuesday we should see some weakness in the morning especially with the market being once again overbought, but a higher close is still expected by the end of the day on Dec 6.
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