For Monday the market continued to rally with the number of participating stocks still quite wide. Industrials and consumer staples hit record highs and the NASDAQ rose above 5,000 briefly for the first time since December. US Treasury yields rose again on the back of Japan’s government’s announcement of more fresh stimulus to try to boost their economy. Overnight the 30 year yields hit a record low of 2.089 before rising today to 2.149.
Crude oil continued to decline by the close of trading today falling to $44.76 a barrel. (WIT) Brent crude was down to $46.25.
S&P Index Close
The S&P index closed up 7.26 points to close at a new all-time high of 2137.16. Intraday it reached 2143.16.
Dow Jones Index Close
The Dow Jones Index rallied 80.19 points for a gain of 0.44% to close at 18,226.93. Intraday it reached 18,283.90 for new 52 week high.
NASDAQ Index Close
The NASDAQ rose 31.88 points for a gain of 0.64% to close at 4,988.64. The 52 week high is 5,231.94 so there is still some work ahead for the NASDAQ.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – July 11 2016
Stock Market Outlook: Chart Comments:
The S&P moved to its highest level. It closed just off all-time highs and left behind a candlestick that normally indicates one more chance to push up and then some selling. Meanwhile the 20 day simple moving average (SMA) is moving back up following by the 50, 100 and 200 day moving averages. The Upper Bollinger Band and Lower Bollinger Band are moving away from the market which indicates the market will try to push higher.
We will see some weakness shortly, but the medium-term outlook is still higher.
Stock Market Outlook: Support and Resistance Levels:
These are the present support and resistance levels. These levels have not changed since January 2015.
2100 is still primary resistance but one more close above it and it will become light support.
2090 is very light support.
2075 is also light support
Below that is 2050 which is light support.
2025 is better support than 2050 through to 2090.
2000 is primary support.
Weak support is at 1970 while stronger support is at 1956 and technically it is more important than 1970 for the market. 1940 is light support as is 1920. 1900 is more symbolic than anything else.
1870 is support. 1840 continues to be support. The 1820 level is light support. The strongest support level is at 1800.
1775 and 1750 are both critical support for the present bull market. While 1775 is important it is 1750 that is the bottom line.
A break of 1750 would mark a severe correction from the all-time high of 2134.72. This would be the biggest correction since the plunge in 2011 of a 20% pullback. A pullback to 1750 from the all-time high would be a drop of 384 points for a decline of 18%. A pull-back of that size would definitely stun investors and bring to question whether the bull market which started in 2009 is finished. From 1750 it is an easy slide to 1600 which was near the market top in 2007.
Stock Market Outlook Technical Signals
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and rising quickly.
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 July 1. The buy signal was stronger again on Monday.
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, overbought and continuing to rise.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and snow rising indicating higher prices are ahead.
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 an up signal in place for Tuesday and is overbought.
Fast Stochastic: For the Fast Stochastic I use the K period of 20 and D period of 5. These are not default settings but settings I set for the 1 to 3 month S&P 500 chart when I have it set for daily views. The Fast Stochastic also has an up signal in place for Tesuday and is also overbought. It is the only indicator that is showing signs of possibly turning down if there is some selling on Tuesday.
Stock Market Outlook for Tomorrow – Jul 12 2016
Once more the technical indicators are all positive for Tuesday. They are gaining strength but as they do so they are also reaching into overbought territory. The closing candlestick today is a symptom of that as it is still bullish for Tuesday but warnings that the market will experience some weakness. Often this candlestick is followed by a stronger bearish candlestick the following day.
The market can continue higher but some selling could happen on Tuesday after what should be opening jump following Alcoa’s better than expected earnings.
Even though we should see some weakness and dips on Tuesday, the outlook overall is still for higher prices. If on Tuesday then, stocks take a break from the rally, it is an opportunity to set up more profitable trades as the market has further to rise before this rally runs out of steam.
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