The rally today was three-part. The drop in the US dollar continued, oil closed at a 10 month high and Federal Reserve Chair Janet Yellen advised rates will rise but only once the economy improves. Basically then, a rate increase in June seems highly unlikely and July’s unemployment report will take on greater importance.
S&P Index Close
The S&P spent the day climbing higher although there was a dip back to 2101.56 around 1:00 PM which was quickly bought. The day closed with the index having reached 2113.36 late afternoon and then falling to 2109.41 at the close for a gain of 10.28 points or just shy of half a percent.
Dow Jones Index Close
The Dow Jones had the best day of the three indexes rising 113.27 points by the close. Intraday though it reached 17,959.68, just 50 points away from 18000. The day ended at 17,920.33. The gain for the Dow was 0.64%.
NASDAQ Index Close
The NASDAQ rose 0.53% to close at 26.20.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – June 6 2016
Stock Market Outlook: Chart Comments:
The S&P closed below the Upper Bollinger Band and well above all the major moving averages. The closing candlestick is a bit bearish for Tuesday. Normally this candlestick points to some weakness creeping in and the possibility of a slightly negative close. This candlestick builds on Friday’s candlestick which is known as the hanging man. Both point to weakness.
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 S&P index is at its highest level since November 4 2015 and at the highest level for 2016.
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 again on Monday.
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 positive and starting to climb signaling that prices are rising for equities.
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 issuing 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 also neutral and it too is extremely overbought and could issue a sell signal shortly.
Stock Market Outlook for Tomorrow – Tuesday June 7 2016
For Tuesday the technical indicators are once again split. Three are very overbought and ready to pullback. One is rising and two are not changing but continue to simply move sideways.
Tuesday could see some weakness creep into the rally. Stocks should move higher, but there could be another retest of 2100 or even 2095 on Tuesday. While the candlesticks point to a slightly lower close for Tuesday the technical indicators point to weakness, sideways but a bias still for a positive close. A climb for the S&P from the present level will stay choppy but the outlook still points to the index this week making its way higher.
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