On Tuesday energy shares pulled back as oil continued its decline. However much of the energy sector loss was recovered by the financial sector as many analysts expect March to see another interest rate hike which most investors will be positive for the financial stocks.
Meanwhile a decent rally in the morning saw the Dow and NASDAQ indexes reach new intraday all-time highs but the rally was given back by the close and only the NASDAQ closed at new all-time highs.
S&P Index Close
The S&P index ended the day up just 0.52 points to 2293.08
Dow Jones Index Close
The Dow Jones ended up 37.87 closing at 20,090.29
NASDAQ Index Close
The NASDAQ closed up 10.67 points at 5674.22
Stock Market Outlook
Stock Market Outlook review of Tuesday Feb 7 2017
Chart Comments At The Close:
On Tuesday the S&P closed just slightly below the Upper Bollinger Band for the third day. The closing candlestick was bullish to neutral for Wednesday. You can see that the possible Bollinger Bands Squeeze I wrote about earlier last week is still in play and the Lower Bollinger Band has now moved back above the 50 day moving average which is bearish.
The 2260 level continues to hold up well but better support is at 2250 which is also light support and won’t hold a determine sell-off up by much more than a few hours.
The 2300 level is growing resistance. The S&P must break through shortly or risk falling back to at least 2260.
All the moving average are continuing to rise.
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is still positive but is moving lower. (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 sell signal Jan 30 2017. The sell signal is much weaker heading into Wednesday. (negative)
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 positive and moving slightly lower. (positive).
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 an up signal in place. (positive)
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 but is moving lower. (negative)
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 moving sideways from an overbought reading. (positive)
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 has an up signal in place. (positive)
Support Levels To Be Aware Of:
The market has been trying to build support at the 2250 level. There is light support at 2195 but better support is at 2180 and then 2150.
Stock Market Outlook for Tomorrow – Wednesday Feb 8 2017
The technical outlook is continuing to be 4 to 3 positive. While the markets gave back pretty well all the rally on Tuesday, we have seen this happen many times before. Often the following day the markets will repeat the performance but move higher.
With 4 to 3 in favor of the positive indicators there is still a better than average chance that the market will move higher on Wednesday but the give back of today’s rally is a strong bearish signal. The rising volume on such a day is also bearish.
Therefore for Wednesday Feb 8 2017 the outlook is sideways with only a slight bias to the upside.
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