The outlook for Tuesday was for the market to show some signs of weakness but continue to advance. The price of oil rebounded on Tuesday, closing higher by 4.6%.
S&P Index Close
The S&P index closed up 14.98 points for double Monday’s gain. It closed at 2152.14
Dow Jones Index Close
The Dow Jones Index rallied 120.74 points to another new all-time high, closing at 18,347.67 just below its intraday high of 18,371.95.
NASDAQ Index Close
The NASDAQ rose 34.18 points to close above 5000 for the first time this year. The close was 5,022.82.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – Jul 12 2016
Stock Market Outlook: Chart Comments:
The S&P moved to a new all-time high. Yesterday’s closing candlestick was bearish. Today is bullish. Normally though, yesterday’s candlestick takes a day or two to show bearishness.
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.
Even though we will see some weakness shortly, 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 has 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. It is now ovvebought.
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 Tuesday.
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 and 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 Wednesday and is extremely 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 Wednesday and is also very overbought.
Stock Market Outlook for Tomorrow – Jul 13 2016
The technical indicators are all pointing to higher prices but 4 of the 6 are into overbought territory and signals. We will see some weakness either tomorrow or Thursday.
am expecting weakness will start on Wednesday and while we should still see a positive close, it should not be as big a move higher as we saw today.
Alcoa’s better than expected quarterly results helped the markets jump start higher today. On Wednesday after the close we get YUM Brands results. If they are poor, the market will open soft on Thursday. On Wednesday I am expecting a slightly positive close but more choppy trading.
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