The S&P on Thu Oct 26 2017 started the day as anticipated, with a bounce. All three indexes bounced and at one point in the morning the Dow Jones had erased all the drop on Wednesday. The bounce though was expected. Now comes the question of whether the market moves lower on Friday. That was the second part of the outlook on Thursday. Let’s take a look.
S&P 500 Index Close
The S&P index ended up 3.25 to 2,560.40
Dow Jones Index Close
The Dow Jones ended up 71.40 to 23,400.86
NASDAQ Index Close
The NASDAQ closed down 7.12 to 6556.77
Stock Market Outlook
Stock Market Outlook review of Thu Oct 26 2017
Chart Comments At The Close:
The S&P on Thursday stayed near the 21 day moving average for most of the day. The closing candlestick was another bearish candlestick.
The Upper Bollinger Band is falling and the Lower Bollinger Band is rising, often a signal that a Bollinger Bands Squeeze may be starting to form.
All the major moving averages are rising which is bullish.
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is more neutral than positive.
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 Oct 24. The sell signal was stronger 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 is positive, but moving lower and could turn negative on Friday.
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 sell signal still in place 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 often is 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. The rate of change signal is positive but falling which indicates prices are expected to move lower.
Support Levels To Be Aware Of:
The S&P has light support at 2480. It has light support at 2450 and good support at 2425. There is also light support at 2400, 2380, 2350 and 2300.
Stock Market Outlook for Tomorrow – Fri Oct 27 2017
Technically the S&P is not overbought and has two sell signals and the remainder are moving lower.
Despite the gains on Thursday, Friday still looks weak and the chance for a negative close, even a slight one, still exists. This could be stopped however if investors focus instead on the good earnings from Alphabet and Amazon which were announced at the close on Thursday. Both stocks had terrific moves higher which could mean the overall sentiment could be such that stocks could try to close higher. My bet is a slightly lower close.
Stay FullyInformed With Email Updates
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