The stock market outlook for June 1 was for a sideways, choppy session and a higher close. Historically the first trading day of June has been an up day and this year will be seen as such. Indeed considering the steep drop at the open down to 2085.10 and the recovery to 2100, it was actually quite the day.
S&P Index Close
The S&P had a weak opening and spent the rest of the day climbing higher. The close saw the index up 2.37 points to 2099.33, right on the doorstep of 2100.
Dow Jones Index Close
The Dow Jones opened with a triple digit loss down to 17664.79. The close though saw a gain of 2.47 points to 12,789.67. The overall rally was 124.88 points from the day’s low.
NASDAQ Index Close
The NASDAQ opened lower as well but spent more time in positive territory although by the close the index was up just 4.20 points to 4,952.25. This though, places the NASDAQ within 48 points of 5000.
Stock Market Outlook – Advance Decline Numbers
Volume was not as high as I had expected but still at 3.5 billion, it was only slightly below average for New York. By the close 61% of all volume was to this update and 64% of all stocks were back climbing. These were better numbers than in the morning when I did the intraday chart analysis. There were 98 new highs by the close and just 8 new lows.
The NASDAQ traded below average volume as well, with 1.8 billion shares traded on Wednesday. 55% of all volume was to the upside and 59% of all stocks were advancing. By the close there were 72 new highs and 28 new lows which was a better showing than earlier in the day.
Overall volume is still below average but the Fed’s Beige Book assisted stocks when the Fed report looked like there was a good chance the economic news was not strong enough to warrant an interest rate increase in June.
Stock Market Outlook – Technical Indicators At The Close
Stock market outlook – June 1 2016
Stock Market Outlook: Chart Comments:
The S&P closed on Wednesday below the Upper Bollinger Band but above all the major moving averages. The closing candlestick however is bearish for stocks for a third straight day.
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.
The index is moving sideways rather than 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 resistance.
2075 is light support. Below that is 2050 which is light support.
There is 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 positive and moving sideways.
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 May 25. The strength of the buy signal was unchanged on Wednesday.
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 and very overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is neutral and drifting lower indicating prices are not actually rising.
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 neutral for stocks and is overbought. It is on the verge of providing a sell signal.
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 signaling up for stocks and is also overbought. It too is nearing the point where it could issue a sell signal.
Stock Market Outlook for Tomorrow – Thursday Jun 2 2016
For Thursday the technical signals have not changed. The outlook remains almost the same, sideways and a slight upward bias. Friday is the unemployment number for May. Often the day prior to the unemployment number has seen the market move higher. We could see a rally into the numbers for Friday. Some of that will depend on the Weekly Initial Unemployment Insurance Claims that we will get on Thursday before the markets open.
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