Summary:
Thu May 3 2018 saw the S&P slip below the 2600 level. This is strong support for the index and stocks did decide to bounce off of it. Probably the more dramatic bounce came from the Dow Jones where the index was down almost 400 points and analysts had turned decidedly bearish. But then buyers showed up and by the close the index had recovered all 400 lost points and closed slightly positive.
The S&P at one point in the afternoon did turn positive before the index fell back to close down 5.94 at 2629.73. Into the close the index turned sideways as investors await the April non-farm payroll numbers which come out on Friday before markets open.
Closing Statistics from Thu May 3 2018
The S&P fell 5.94 to 2629.73 down 0.23%
The NASDAQ Composite fell 12.75 to 7088.15 for a drop of 0.18%
The Dow Jones Industrial Average rose 5.17 closing at 23,930.15 for a gain of 0.02%.
Stock Market Outlook Chart Comments At The Close on Thu May 3 2018
The S&P fell below the 200 day moving average at 2600 but then rallied hard and higher to close above the 200 day but below all the other major moving averages.
The closing candlestick was bearish at the close on Thursday.
The 50 day moving average is still leading the market but it is continuing to fall toward the 100 day. The 100 day is trending sideways but the 21 day is turning back up. Meanwhile the 200 day moving average is still climbing, which is about the only bullish signal on the map at present.
Stock Market Outlook review of Thu May 3 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative 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 down signal on May 2. Today, Thu May 3 2018 the sell signal was confirmed.
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 rising.
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 signal is down for Friday.
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 also falling.
Support Levels To Be Aware Of:
2745 to 2750 was light support
2710 was light support.
2700 was support.
2675 was light support.
2650 was light support
2620 is light support
2600 is good 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 May 4 2018
For Friday, stocks will react to the non-farm payroll numbers, especially if the numbers surprise to the downside. If they are better than expected, stocks should be able to move higher during the day.
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