Summary:
Thursday saw markets move higher but most of the action was in the morning. This left the market open to more weakness in the afternoon as the index was unable to break through the 100 day moving average. A second rally in the afternoon failed to break higher and the index closed up but off the highs of the day.
Closing Statistics:
On April 5th (2018) the closing price for the S&P 500 was $2662.84. The security opened up, gained 18.82 points and rose 0.69%.
The closing price for the NASDAQ Composite was $7076.55. The security opened up, gained 34.44 and rose 0.49%.
The closing price for the Dow Jones Industrial Average was $24505.22. The security opened up, gained 240.92 points and rose 0.99%.
Stock Market Outlook Chart Comments At The Close:
The chart overall remains slightly bullish as it tries to gain strength.
The index struggled to break through the 100 day moving average but was unable to, despite several attempts. This left behind a bearish candlestick for Friday.
The index closed below the 21, 50 and 100 day moving averages but well above the 200 day which is bearish.
The 50 day moving average is falling as is the 100 day moving average. Both of these signals are bearish.
The 21 day moving average is turning lower, signaling more downside action is expected as it fell below 2700 but is not yet below the 100 day moving average.
The Lower Bollinger Band is starting to turn sideways which is a bullish sign.
The 200 day moving average is still climbing which is bullish.
Stock Market Outlook review of Thu Apr 5 2018
Stock Market Outlook: Technical Indicators Review:
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 March 20. That sell signal was weaker at the close on Thursday.
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 rising.
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 for tomorrow.
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 is often the first indicator to show an overbought or oversold signal. The RSI signal is rising.
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. The rate of change is negative and rising indicating prices may improve on Friday.
Support Levels To Be Aware Of:
2745 to 2750 was light support
2710 was light support.
2700 was good support.
2675 was light support.
2650 was light support and 2620 was also light support.
2600 is good support for the ongoing rally.
There is good support at the 2550 level from where the market bounced back from the recent correction on Feb 9.
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 – Fri Apr 6 2018
The technical indicators are continuing to improve. Strength is returning to the index although the inability to break through the 100 day is a bit concerning.
The outlook is still positive for Friday but there is weakness developing which we can see in the closing candlestick which is bearish.
Aside from the technical indicators, President Trump’s announcement of wanting more tariffs for Chinese products is bound to cause investors grief again on Friday. The question is, will that grief be enough to bring in heavy selling again.
My personal outlook is that it will not but it will result in some negative periods during the day. Overall though the day should end higher but with the President’s announcement, the day more likely will end down but still above 2600.
A lot of investors will not want to take on much risk ahead of the weekend in case there is more retaliation from China. That may keep volume down. We also have the March jobs number on Friday which will impact markets. Overall the day could be challenging but it should still hold above 2600.
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