The Stock Market Outlook for Wednesday Jun 22 2016 was for stocks to move sideways with a slightly higher close. Instead stocks rallied in the morning and then declined in the afternoon and closed slightly negative on the day.
Investors are totally fixated now on the Brexit vote. Even Fed Chair Yellen’s comments today about how the Fed is not responsible for supporting stocks, fell on deaf ears or perhaps ears that don’t believe the comments to be true. After all, it has been the Fed put on the market, setup by former Fed Chair Ben Bernanke that started the rally back in 2009 and has continually kept it in check from falling “too far”.
Meanwhile gold and oil were lower, the US dollar rose slightly, while the Pound hit a 6 month high.
S&P Index Close
The S&P index rallied nicely in the morning brushing against 2100 as it reached 2099.71 mid-morning only to give it all back and close lower by 3.45 points by the close to 2085.45. Basically the day ended sideways.
Dow Jones Index Close
The Dow Jones also rallied in the morning reach 17920.16 but then falling back to 17,780.83 down 48.90 points.
NASDAQ Index Close
The NASDAQ followed the other two major indexes higher in mid-morning as it reached 4875.93. From there the NASDAQ fell back, closing down 10.44 points to 4833.32.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – Jun 22 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 50 day simple moving average (SMA) but below the 20 day moving average for a second day.
The Lower Bollinger Band is still turning up and is now above both the 200 and 100 day moving averages. This is often a bearish signal and the start of a Bollinger Bands Squeeze.
The Upper Bollinger Band is turning down. The Brexit vote, if results favor the “stay” side. should see the Bollinger Bands Squeeze end.
The closing candlestick on Wednesday was bullish for Thursday.
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 has turned sideways and is not longer climbing. This is being caused by investors being concerned on the Brexit vote.
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 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 remains weakly negative for stocks.
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 falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and moving sideways.
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 up for stocks at the close of trading today.
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 neutral at the close but signals show it is ready to issue a sell signal on Thursday if there is any selling.
Stock Market Outlook for Tomorrow – Thursday Jun 23 2016
For Thursday the market direction is probably sideways ahead of the Brexit vote results which shouldn’t be officially known until Friday.
Technically, there is enough strength that should exiting polls show a commanding lead by the “stay” side we could get a rally on Thursday. The same can be said for exiting polls showing a “leave” vote leading.
Definitely, the technical indicators will not have as big an impact until after Friday however the strength of the technical indicators are primarily pointing sideways for stocks with a slight bias up. That advises us that should stocks fall, it may only be a few days before any fall in stocks, is bought into.
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