What Happened Thu Mar 1 2018
Between Federal Reserve Chair Jerome Powell continued testimony and then President Trump’s tariff “announcement” for steel and aluminum imports stocks could not hold their early morning gains. They quickly broke down. The S&P attempted to hold to the 2700 level but failed and the index tumbled down to an intraday low of 2659.65. The close saw the S&P claw its way back to support at 2675 where it closed 2 points above at 2677. It was another brutal day for investors.
Closing Statistics for Thu Mar 1 2018
S&P 500 Index Close
The S&P index ended down 36.16 to 2677.67
Dow Jones Index Close
The Dow Jones ended down 420.22 to 24,608.98
NASDAQ Index Close
The NASDAQ closed down 92.45 to 7180.56.
Stock Market Outlook – Review of Thu Mar 1 2018
Chart Comments At The Close:
The SPX on Thursday closed at the 100 day moving average after breaking through the 50 day in the morning. The low of the day saw the index dip below the 100 day which could signal a move coming to below the 100 day.
The candlestick at the close is bearish for Friday.
The 50 day moving average is no longer climbing but it moving unchanged sideways. The 100 and 200 day moving averages are still climbing but the 21 day remains below the 50 day.
The S&P was unable to push beyond the 21 day in the morning. The Lower Bollinger Band and Upper Bollinger Band and continuing to move into a potential Bollinger Bands Squeeze sometime next week.
Yesterday the chart was not overly bearish whereas tonight the chart is bearish. A drop below the 100 day moving average on Friday will be another potential for further declines.
Stock Market Outlook review of Thu Mar 1 2018
Stock Market Outlook: Technical Indicators:
All the technical indicators are turning bearish after two heavy days of selling.
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative and 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 a buy signal on Feb 23. The buy signal is ready to turn into a sell signal on Friday.
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 negative and moving lower.
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 and is no longer signaling that the market is overbought.
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 falling back but it is not yet signaling a potential large bounce..
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 falling which indicates lower prices are expected.
Support Levels To Be Aware Of:
2700 was 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 2 2018
The outlook for Friday is bearish once again.
The technical indicators are all turning bearish with negatives signals from all but MACD which is clinging to a very faint up signal which should turn to a down signal on Friday.
Last night’s outlook was looking for a bounce attempt and then a lower close. We got both but Friday has a much less chance of a bounce back due to two failed bounces on Tuesday and Wednesday.
A lower close below the 100 day moving average is anticipated and a test of 2620 is in the outlook for Friday. Asian markets overnight were selling lower on concerns over possible Tariffs and European futures were solidly negative.
Oh and don’t forget, we get February’s non-farm payroll numbers on Friday. Why not right?
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)
Market Direction External Links
IWM ETF Russell 2000 Fund Info
Market Direction SPY ETF 500 Fund Info