The Stock Market Outlook for Tuesday Jun 14 2016 was for stocks to rebound but still close negative on the day. As fear continues to climb over the possibility of the UK voting to leave the European Union, the market rebounded in the last hour of trading to close down just 3.74 points. Among the biggest concerns in the morning on Tuesday was the drop of Germany’s 10 year government bond into negative territory for the first time. Gold rose slightly on Tuesday and oil remained weak, closing below $49 to $48.49 (WIT) a barrel.
Meanwhile retail sales rose half a percent which was better than expected.
S&P Index Close
The S&P on Tuesday tested 2065 a number of times during the day. In the last hour the market rallied hard on increasing volume to close down just 3.74 points at 2075.32.
Dow Jones Index Close
The Dow Jones also rallied in the last hour. It still closed down by 57.66 points to 17,674.82.
NASDAQ Index Close
The NASDAQ also rallied hard in the last hour on fairly good volume, closing down 4.89 points to 4843.55.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – June 14 2016
Stock Market Outlook: Chart Comments:
The S&P managed to recover much of the day’s losses in the last hour and closed once again at the 50 day simple moving average (SMA) on Tuesday.
The closing candlestick is bullish for Wednesday but not always on the very next day. Often this candlestick is followed by a sideways day and then a move higher.
The SPX continues to be led by the 50 day and then the 100 day both of which are rising which is an up signal for stocks. Overall the market is now set up as it should be with the 50 day, following by the 100 day followed by the 200 day.
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 resistance which as we saw today, continues to keep the market advance well in check.
Very light support has been built around 2090.
2075 is light but better support. Below that is 2050 which is light support.
There is also light support at 2025.
Better support is at 2000.
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 negative and falling.
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 June 14. Today MACD confirmed the sell signal.
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 but trying to rise.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and moving more sideways than up or down. This often indicates that stocks are “churning” and are not predicted to enter any kind of lengthy decline.
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 is pointing down for Wednesday.
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 is also pointing down for Wednesday.
Stock Market Outlook for Tomorrow – Wednesday Jun 15 2016
For Wednesday there are now 3 sell signals in place and 2 technical indicators that are negative. There is only one indicator that is positive, the Rate Of Change. This definitely creates a bias lower for stocks.
However Wednesday will belong to the Fed Chair Janet Yellen who will sway the market up or down depending on her decision on interest rates. I am expecting the market on Wednesday to open slightly negative and then climb later in the morning as investors anticipate the Fed’s interest rate announcement at 2:00 PM.
I am then expecting the market to close positive follow a decision not to raise interest rates. If on the other hand interest rates are increased, stocks will tumble quickly. I am not expecting that to be the case.
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