What Happened On Tue Feb 6 2018
On Tuesday markets opened a great deal lower following sell-offs in Europe and Asia. The early plunge was quickly bought into and the market staged a recovery rally which by 10:00 AM had worn itself out. The market moved back lower and then waffled until late in the day when a large rally pushed most indexes back to their respective 50 day moving averages. The question everyone now wants to know is whether this is the end of the sell-off or just a breather.
Closing Statistics for Tue Feb 6 2018
S&P 500 Index Close
The S&P index ended up 46.20 to 2695.14 for a gain of 1.74%
Dow Jones Index Close
The Dow Jones ended up 567.02 to 24,912.77 for a gain of 2.33%
NASDAQ Index Close
The NASDAQ closed up 148.36 to 7115.88 for a gain on 2.13%
Stock Market Outlook – Review of Tue Feb 6 2018
Chart Comments At The Close:
Tuesday saw an early morning plunge that broke through the 100 day moving average and two levels of light support. However the plunge was bought into and stocks rose higher by the close. At one point they reached 2700, the 50 day moving average and closed just below it. This left behind a long bullish candlestick. The 200 and 100 day moving averages are still climbing while the 50 day is flat and the 21 day is moving lower. The Upper Bollinger Band is starting to move higher which is bullish.
Stock Market Outlook review of Tue Feb 6 2018
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative 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 6 the sell signal was stronger despite the late day rally.
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 negative and rising from oversold.
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 and is oversold. There are signs that Slow Stochastic signal could turn up as you can see in the chart tonight.
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 bouncing from being deeply oversold.
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 rising from being oversold.
Support Levels To Be Aware Of:
2700-2710 is at present the 50 day moving average. It is not support but often these technical indicators can slow or reverse a sell-off.
2675 and 2620 are light support.
There is good support at the 2550 level.
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 almost 15%.
Stock Market Outlook for Tomorrow – Wed Feb 7 2018
For Wednesday markets will probably open lower following the big late day rally but then stage a second bounce attempt. At present the day looks like it could end positive but often a rally such as we saw on Tuesday is followed by another negative close. A lot will now depend on how the S&P trades during the day. Another highly volatile day will be negative for a quick recovery. A less volatile day with the index not dipping after an early morning lower open and bounce, will be more positive for a quicker recovery.
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