Facebook Stock dominated the day on Thursday marking the biggest one day loss of market capitalization by a single stock in stock market history as the collapse of the stock wiped out $120 billion of capitalization. Some stocks followed Facebook lower but not anywhere near the percentage lost. Amazon for example lost 3% and Microsoft was down 1%.
Stock Market Outlook Chart Comments At The Close on Thu Jul 26 2018
The S&P ended the day on Thursday above the 2820 level at 2837.
Thursday marked the ninth day in ten trading days above 2800. The close though left behind a potential reversal candlestick which could mean a lower day on Friday or a sideways close.
All the major moving averages are still rising.
The Bollinger Bands are continuing to signal the index will move higher.
The SPX chart is still bullish.
Stock Market Outlook review of Thu Jul 26 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive but falling.
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 an up signal on July 9. The up signal was still strong 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 moving sideways.
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 is extremely overbought and has an up signal 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 is often the first indicator to show an overbought or oversold signal. The RSI signal is falling.
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 signal is positive but also falling.
Support Levels To Be Aware Of:
2795 is light support
2745 to 2750 is light support
2725 is light support.
2700 is support.
2675 is light support.
2650 is light support
2620 is light support
2600 is strong support.
There is good support at the 2550 level from where the market bounced back from the recent correction low 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 Jul 27 2018
For Friday the outlook is for a choppy day. The technical indicators are still holding to positive readings but there are some signs that the index is tiring of the present rally. The drop of Facebook stock may have been enough to stall the rally on Friday and turn it sideways.
Technically the indicators are showing a few lower readings but they are still overwhelmingly positive. Friday is probably going to show some further dips, lots of choppiness but with Amazon’s earnings pushing that stock higher, there a good chance for a positive close. If Twitter’s earnings are poor however, it will probably be enough to give the index a negative close. Overall I think there is a good chance of a positive close.
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