At the start of August I wrote Ana article discussing how poor the month historically can be. Some of the problem stems from lower volumes with investors taking holidays, but in general most days volume has not been all that bad. For August this year the problem seems to be primarily that after 8 months of a new president a lot of the plans that investors were waiting for have just not happened.
A change in taxes is definitely needed and repatriation of overseas profits is also needed.
Infrastructure spending has still not gone anywhere. A good example of the growing frustration can be seen in infrastructure stocks like Nucor Stock, among others, who took it “on the chin” today so to speak, falling 4.2% to $54.35 as investors are growing impatient on a lack of infrastructure spending. In short, after days of the market slowly inching its way forward, investors followed up on last Thursday’s down day by selling the market lower for a second time in a week.
By the end of the day on Thursday, the Dow and the S&P had completed their second worst day of 2017.
S&P Index Close
The S&P index ended down 38.10 to 2430.01.
Dow Jones Index Close
The Dow Jones ended down 274.14 to 21,750.73
NASDAQ Index Close
The NASDAQ closed down 123,19 to 6221.91
Stock Market Outlook
Stock Market Outlook review of Thu Aug 17 2017
Chart Comments At The Close:
The S&P fell lower on Thursday and broke through the 50 day moving average and closed well below it. It punched through the Lower Bollinger Band and gave every indication that the pullback today will be the outcome of the ongoing Bollinger Bands Squeeze.
The 100 and 200 day moving averages continued to climb today despite the selling but the 21 day moving average turned lower.
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative and at levels last seen on August 10 during that sell-off.
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 Aug 3. The sell signal gained more strength today and the MACD histogram which was starting to weaken, pushed back to prior levels and indicates that more selling should be expected.
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 negative and down at the levels from the August 10 sell-off.
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 which had a buy signal in place, now has a sell 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 often is the first indicator to show an overbought or oversold signal. The RSI signal is negative and falling for Thursday.
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 fell from positive straight through to extremely negative. It is at a signal that often indicates the market will be bouncing back soon.
Support Levels To Be Aware Of:
The market has developed 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 – Friday Aug 18 2017
For Friday the technical indicators are all negative. As well the break of the 100 day moving average is rarely a one day event. The best indicator for the bulls after the close was the Rate Of Change which is so low that rarely will prices fall a great deal lower.
For Friday I am expecting a bounce attempt in the early morning, although the open looks set to be negative to start the day. That might only last a few minutes before stocks start to move higher. It won’t last if there is a rally. The Market Breadth Indicator outlook for Friday, shows stocks are under pressure and going to close lower again on Friday.
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