What Happened On Thu Nov 30 2017
The move higher again today was truly astounding. At one point the Dow Jones was up 380 points and closed up 331 points smashing through 24,000. The S&P made new highs yet again and the only laggard was the NASDAQ which still managed a respectable 49 point gain and ended the day well within reach of 6900.
As 2017 enters the final month of the year starting tomorrow, Friday Dec 1 2017, it is apparent that returns this year has been stunning. Returns in all my portfolios are up almost to levels seen in 2009 when the market reversed from the credit crisis collapse. Returns in many portfolios are on up 70% which is not common except in severe high volatility periods which 2017 did not experience. Today many of the analysts who had been predicting a market collapse in October and again in November have been moved to the bull side and most seemed rather shell-shocked at the gains made in the market. Earnings fundamentals are at play as investors are anticipating even better earnings in 2018 if the tax reform bill is passed. As well though there is a high degree of enthusiasm which is more common when we begin to near topping action. No one can predict when a correction will occur but markets cannot go straight up forever. My plan is simple – staying cautious, staying invested and closing positions for profits whenever they appear. Guard capital in use as much as possible and be aware that rarely are the majority of investors correct and right now the majority are in the bull camp.
Closing Statistics for Thu Nov 30 2017
S&P 500 Index Close
The S&P index ended up 21.51 to 2647.58
Dow Jones Index Close
The Dow Jones ended up 331.67 to 24,272.35
NASDAQ Index Close
The NASDAQ closed up 49.63 to 6873.97
Stock Market Outlook – Review of Thu Nov 30 2017
Stock Market Outlook review of Thu Nov 30 2017
Chart Comments At The Close:
On Thursday the S&P made another new closing high and intraday high. It closed above the Upper Bollinger Band for a third straight day.
The closing candlestick is bullish but often also signals a down day ahead before more upside action should be expected.
The Bollinger Bands Squeeze that has dominated the index since the end of October is over and the Lower Bollinger Band has fallen below the 50 day moving average which is bullish. All the major moving averages are still rising.
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and is at the highest level in more than 3 months. The market is overbought and may dip to consolidate gains.
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 28. The up signal is stronger today at the close. It has the strongest up reading in more than three months. The market is overbought and may dip to consolidate gains.
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 still moving sideways. It is continuing to suggest more upside action and buying to continue.
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 continues to point to an overbought market with a very weak down signal generated at the close on Thursday.
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 at the highest level since Oct 20. At that time the market dipped with a reading this high. The Relative Strength Index (RSI) is warning that the market is overbought and may dip to consolidate gains.
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 and rising sharply. It is at its highest reading since Oct 27. Higher prices should be expected.
Support Levels To Be Aware Of:
The 2600 level is not support yet but dips back to the 2600 level and especially any drops below 2600 are going to be buying opportunities and may therefore be short-lived as the bias remains up.
There is good support at the 2550 level which could assist in pushing the index higher in November.
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.
Stock Market Outlook for Tomorrow – Fri Dec 1 2017
For Fri Dec 1 2017 the market is overbought and as we can see from the many technical indicators, the market could dip to begin to consolidate gains. Markets have trouble with “round numbers”. This is not something new for 2017 but has been noticed for decades. With the Dow slamming through 24000 today, the NASDAQ at 6900 and the S&P above 2600, dips are going to be more likely until market fundamentals pullback and allow the market to recover from an overbought condition.
That means on Friday we could see a dip and even a negative close would not be out of line with the bull market rally. At the same time investors may remains enthusiastic enough to jump in and keep the party alive for another day, especially those who left in October and in November thinking it was safe to be on the sidelines. They have in many ways missed out on some terrific moves. They may want back in. If the market closes higher on Friday, watch for dips on Monday. If the market closes lower on Friday watch for Monday to open soft and turn back positive. Any passing of the Tax Reform Bill should move the market higher but then we could see a stalling and a dip as investors weigh what comes next.
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