The stock market outlook for Friday was for stocks to head higher in the morning after the open but still close negative on the day. The price of oil rallied on Friday by 4 percent and investors decided that perhaps the UK wouldn’t leave the EU after all. This assisted stocks in trying to hold above key support levels at 2050 which had been tested on Thursday.
S&P Index Close
The S&P on Friday tried to rally three times during the day but the high for the day was set in the early morning when the S&P made it to just above 2075 only to be met by sellers. The low for the day was also in the morning at 2062.84 around 11:35. The late afternoon saw a decent rally which was sold off in the last hour ending the day down 6.77 points for a slight loss of 0.33% to close at 2071.22.
Dow Jones Index Close
The Dow Jones followed the S&P’s path and made its low of the day abound :35 as well, reaching 17,602.78. By the close the Dow was down 57.94 points for a loss equal to the S&P loss of 0.33%. The Dow closed at 17,675.16.
NASDAQ Index Close
The NASDAQ had the worse day with stocks falling lower most of the day. While the early morning low of 4792.34 was the lows of the day, the close of 4,800.34 was not much higher. Altogether the NASDAQ lost 44.58 points or 0.92% on Friday.
Stock Market Outlook – Technical Indicators At The Close
Stock market outlook for June 17 2016
Stock Market Outlook: Chart Comments:
The S&P closed below the 50 day simple moving average (SMA) again on Friday. This is the third closing in a row below the 50 day. The Lower Bollinger Band is turning up and moving above both the 200 day and 100 day moving average. The Upper Bollinger Band is turning down. This should be watched for a possible Bollinger Bands Squeeze. At the present time I think this potential squeeze is being caused by the Brexit uncertainty and once it is resolved we could see the Bollinger Bands Squeeze disappear.
The closing candlestick on Friday was bullish for Monday.
The SPX continues to be led by the 50 day and then the 100 day followed by the 200 day. The 50 day moving average is starting to fall.
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 resistance.
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 again on Friday but the strength of the down signal is weak and while it is expanding, there is no strong indication that the sell signal will quickly jump. Instead the sell remains weakly down.
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 rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and moving sideways showing 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 Monday but could be on the verge of a buy 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 also pointing down for Monday.
Stock Market Outlook for Tomorrow – Monday Jun 20 2016
All week the Brexit vote will dominate the news and stocks. I am expecting Monday morning to be weak but stable with little chance of any dip being deeper than 2050. By the midday I am expecting the market to try to rally higher and by the early afternoon I would expect any rally from midday to continue. The close though, I think will see selling but may remain positive.
Meanwhile, it is important for this week to understand whichever way polls show the Brexit vote will follow, will send stocks higher if polls show the “stay” side as leading or lower if polls show the “leave” side is leading. This will override any technical indicators at the present time.
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