Review of Thursday March 15 2018
Summary:
Thursday saw another negative close for the NASDAQ and S&P but a positive close for the Dow. The market was on a roller coaster ride most of the day but followed a similar pattern seen Tuesday and Wednesday, of opening higher, pushing to an intraday morning high and then falling back and closing near the lows of the day. For the SPX the 2745 level held for a second day and the index closed just above it.
Closing Statistics:
S&P 500 Index down 2.15 to 2,747.33
Dow Jones Index up 115.54 to 24,873.66
NASDAQ Index down 15.07 to 7,481.74
Stock Market Outlook Chart Comments At The Close:
The SPX still looks stuck in a range of 2700 on the low and 2800 to the high.
The index on Thursday fell below the 50 day moving average, but climbed back and closed at it. 2745 was tested 5 times during the day and each time the index fell and reached for 2745, buyers would return and push stocks back up.
Meanwhile the 21 day moving average is still climbing toward the 50 day moving average which is trending sideways.
The 100 and 200 day moving averages are still climbing.
The Bollinger Bands Squeeze is still in play but all indications again from Thursday’s close is that the squeeze will end with a push to the upside.
The closing candlestick is bearish for Friday but often stocks will bounce off the 50 day moving average.
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive 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 buy signal on March 5. The buy signal is weaker on Thursday but still holding a fairly strong buy signal.
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 but falling.
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.
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 moving lower.
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 positive and falling which indicates lower prices are expected.
Support Levels To Be Aware Of:
2745 to 2750 is light support
2710 is light support.
2700 is good support.
2675 is light support.
2650 is light support and 2620 is also light support.
There is good support at the 2550 level from where the market bounced back from the recent correction.
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 Mar 16 2018
Technical indicators are shifting their bias to the downside for the short-term. While still not terribly bearish despite a third day of a lower close, there are signs that the S&P will move lower to find stronger support.
There are no technical signals that are overly negative. Only the Slow Stochastic has an actual down signal in place however all the other indicators are pulling back including the Ultimate Oscillator which is near negative readings.
We should see an attempt to move higher on Friday near the open yet again. The markets will either then fall back and push below 2745 or even possibly 2740 or they will rise and move above 2760. At present they look set to fall to at least 2740.
While three days of selling is not enjoyable by any stretch, there are no signals that advise us a big drop is imminent. Investors remain nervous but not overly concerned as measured by the VIX Index which closed at 16.59, down 3.71%.
Friday should see some kind of bounce attempt with the S&P at the 50 day moving average for a second day.
Overall though the market continues to look weak and ready to dip lower.
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