Today’s Stock Market Outlook was for weakness to continue and even some negative periods during the day. The close though was still to be positive.
The dropping US dollar helped many stocks today, particularly multinational companies that sell abroad and are more affected by the rise of the US dollar. Other stocks helped were commodity stocks including Barrick Gold which was up over 2% and set a new 52 week high today.
S&P Index Close
The S&P shot higher at the open and then within half an hour commenced a pullback that eventually took the index down to 2112.71. That did not turn the index negative on the day though and this brought in buyers who pushed the index back up. First the index made its way to 2118 by the lunch hour and then 2120 in the mid to late afternoon. The close saw the index up 6.99 points to 2119.12.
Dow Jones Index Close
The Dow Jones also jumped at the open and then fell back to 17,931.91 by mid-morning. This too brought in buyers who by the close had retaken the early morning gains and ended the day above 18,000 to close at 18,005.05, up 66.77 points.
NASDAQ Index Close
The NASDAQ also jumped at the open and then sold off turning slightly negative for a brief few minutes twice in the morning. By the close the index had reached 4980 and then pulled back to 4974.64 by the close, up 12.89 points.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – June 8 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 bullish for Thursday. This is the first bullish candlestick in 3 days. The index is continuing to follow the Upper Bollinger Band higher.
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 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 still resistance and has not been decisively broken. We will need a couple more days of activity above 2100 before it will become support.
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 but is 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 buy signal on May 25. The strength of the buy signal was unchanged again on Wednesday. This continues to be a concern. The buy signal should be growing. It is not.
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 back moving sideways indicating the rally is running out of steam.
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 issued a sell signal yesterday but today turned back neutral. It remains extremely overbought.
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 also issued a sell signal on Tuesday but today issued a buy signal. It too is extremely overbought.
Stock Market Outlook for Tomorrow – Thursday Jun 9 2016
For Thursday the technical indicators are showing some weakness but no sell signals.
The biggest concern remains MACD which does not grow in value despite the market climbing higher. This almost always signals that a rally is not to be trusted and indeed, many investors do not trust this rally. That bearishness could aid the market is continuing to push higher.
Overall there are lots of signals that are weak and many that are weakening, but none show much in the way of a major pullback coming.
The outlook for Thursday then is for some more weakness, especially in the morning, but another positive close.
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