The outlook for Thursday was for the market to rebound but end up moving lower. Instead the morning saw the market move lower, falling to 2050 before investors stopped selling and started buying. Investors also were buoyed by the news that the latest polls put the “Stay” Brexit vote in the lead, especially following the tragic shooting and death of Labour MP Joy Cox. As discussed yesterday, the chance that the “Stay” side could win, will send stocks higher as we saw this afternoon.
S&P Index Close
The S&P on Thursday fell to 2050.37 in the early morning which brought in buyers. They picked up shares and by the end of the day the S&P had recovered all the lost ground and closed up 6.49 points to 2077.99 in what was a remarkable recovery rally.
Dow Jones Index Close
The Dow Jones followed the S&P’s leads and closed up 92.93 points to close at 17,733.10.
NASDAQ Index Close
The NASDAQ rose 9.98 points by the close to 4844.92, despite being down at 4,778.78 early morning.
Stock Market Outlook – Technical Indicators At The Close
Stock market outlook – June 16 2016
Stock Market Outlook: Chart Comments:
The S&P fell through all three major moving averages on Thursday before rallying back. The rally though saw the index close above the 100 day but below the 50 day moving average. The closing candlestick however is bullish for Friday.
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.
The 20 day simple moving average (SMA) is continuing to rise which is a good sign for stocks but the 50 day is turning lower. While I am not expecting it will fall below the 100 day, if it does it will signal a new sell signal for the entire market.
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 and 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. The sell signal grew on Thursday to read negative 11.56 which is lower than Wednesday’s close.
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 rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and moving sideways showing the indecision among many investors at the present time.
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 Friday.
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 Friday.
Stock Market Outlook for Tomorrow – Friday Jun 17 2016
For Friday the technical indicators are still overly negative. The rally from Thursday may move into Friday and investors will probably endeavor to do so.
Historically the Dow has moved higher in 10 of the last 16 years on the monthly witching day which is Friday June 17 this year. However once the bounce leaves the market it looks like it could resume the downside so for Friday we can say the market has a bias to the lower side but first there is a good chance stocks will try to continue Thursday’s rally on Friday.
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