Review of Thu Mar 22 2018
Summary:
Thursday saw investor concerns turn into action as stocks were dumped by investors worried about the possibility of a global trade war against the backdrop of rising interest rates.
It was a day of carnage with no bright spots although utilities and real estate sectors did hold up under the intense selling pressure.
Closing Statistics:
The closing price for S&P 500 was $2643.69. The security opened down, and fell 2.52%.
The closing price for Dow Jones Industrial Average was $23957.89. The security opened down, and fell 2.93%.
The closing price for NASDAQ Composite was $7166.68. The security opened down, and fell 2.43%.
Stock Market Outlook Chart Comments At The Close:
The S&P closed below the 100, 50 and 21 day moving averages again on Thursday and below the 2650 level.
The action on Thursday left behind a bearish candlestick for Friday and the possibility of a drop to 2600.
The 50 day moving average is falling and the 100 day moving averages is trending sideways. Both of these signals are bearish.
The 21 day moving average is turning back down signaling more downside action is expected.
The Lower Bollinger Band is falling away from the 100 day moving average which is bearish.
The Bollinger Bands Squeeze is still in play and looks like it will send the index lower. The chart is overly bearish.
The 200 day moving average is still climbing which is bullish.
Stock Market Outlook
Stock Market Outlook: Technical Indicators Review:
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 sell signal on March 20. That sell signal was stronger again 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 negative and falling. It is slightly oversold.
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 for the 7th day.
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 fallin and is now oversold.
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 indicating lower prices lie ahead.
Support Levels To Be Aware Of:
2745 to 2750 was light support
2710 was light support.
2700 was 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 23 2018
The carnage of stocks on Thursday has set the market up for a move still lower. We could see a slight bounce on Friday near the open but it will be sold into. The index is set to move still lower. A move on Friday down to 2600 would not be surprising.
The action on Thursday wiped out the recent gains. The index looks like it may try to retest the 2600 level and from there the 2550 level.
Technical indicators show the market as slightly oversold but with room to still fall.
Friday will see the indexes under more selling pressure and closing lower. Higher volatility should be evident throughout the day.
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