The biggest problem on Tue Feb 20 2018 was Walmart which saw its biggest one day decline since 2015. The huge drop in the stock created a small panic among retail stocks including Target, Costco and even Home Depot Stock (HD) which announced estimate beating earnings numbers. Amazon rose 1.4 percent.
Closing Statistics for Tue Feb 20 2018
S&P 500 Index Close
The S&P index ended down 15.96 to 2716.26
Dow Jones Index Close
The Dow Jones ended down 254.63 to 24,964.75
NASDAQ Index Close
The NASDAQ closed down 5.16 to 7234.31
Stock Market Outlook – Review of Tue Feb 20 2018
Chart Comments At The Close:
The index closed back below the 50 day moving average and left behind at the close, a bearish candlestick for Wednesday. The 21 day moving average continues to fall toward the 50 day and the Lower Bollinger Band is still falling toward the 200 day moving average. The 100 and 200 are still climbing but the 50 day is moving sideways. After 6 days or the rally, a breather was not unexpected.
Stock Market Outlook review of Tue Feb 20 2018
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and rising.
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 Jan 31. On Feb 21 the sell signal continued to lose strength.
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 signal is positive and moved lower.
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 strong up signal still in place.
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. The RSI signal is falling back.
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. With the Rate Of Change prices are rising when signals are positive. Conversely, prices are falling when signals are negative. As an advance rises the Rate Of Change signal should also rise higher, otherwise the rally is suspect. A decline should see the Rate Of Change fall into negative signals. The more negative the signals the stronger the decline. On Tuesday the rate of change is negative and falling which indicates lower prices are expected.
Support Levels To Be Aware Of:
2700 is now resistance.
2675 is light support.
2650 is light support and 2620 is also light support.
There is good support at the 2550 level from where the market bounced back from the recent correction.
The S&P has light support at 2480. It also has light support at 2450 and good support at 2425. Below that there is some support at 2400, 2380, 2350. 2300 has the most support at present but would represent a full correction as a drop to this level would be 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Wed Feb 21 2018
The technical indicators as a whole did not change much on Tuesday despite the decline in the S&P. There are definite signs of weakness as seen by the Rate Of Change negative reading, the decline in the Relative Strength Index (RSI) and the down signal from MACD. But other signals are still pointing higher or are positive. In general Wednesday looks weak but we should also see some positive time as well on Wednesday. The close though still looks a bit lower.
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