On Monday stocks remained weak as investors await the promised tax reform which most hope will follow Trump’s healthcare plan. By the end of the day the S&P was lower along with Dow while the NASDAQ squeaked out a very slim positive close. The US dollar fell to a 6 week low on concerns over global trade after the end of the latest G20 meeting.
Let’s look at the closings on Monday and then take a technical overview.
S&P Index Close
The S&P index ended the day down 4.78 points to close at 2,373.47
Dow Jones Index Close
The Dow Jones ended down 8.76 points to close at 20,905.86.
NASDAQ Index Close
The NASDAQ closed up 0.53 points to end the day at 5,901.53
Stock Market Outlook
Chart Comments At The Close:
On Monday Mar 20 2017 the S&P ended the day down at the Middle Bollinger Band. The day’s action left behind a bearish candlestick for Monday. This was the third day in a row for a bearish close.
The index did slip below the 21 days moving average (same as Middle Bollinger Band) and recovered back to the 21 day.
The Bollinger Bands Squeeze is continuing and right now it looks more like the market could slip lower and move below the 21 day. But still all the major moving averages are all climbing which remains bullish.
Stock Market Outlook review of Mar 20 2017
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is slightly negative and trending 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 sell signal Mar 7 2017. At the close of trading on Monday the sell signal was still dominant but it is not overly strong. In general the bias remains steady with negative readings just above negative 2. This is more a weakness signal than a pullback signal.
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 still positive and falling.
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 has a down signal in place.
Rate of Change: Rate Of Change is set for a 21 period. This indicator looks back 21 days and compares price action from the past to the present. The rate of change signal is positive but continuing to move lower which indicates a strong possibility of lower prices lie ahead.
Relative Strength Index: The relative strength index is set for a period of 5 which gives it 5 days of market movement to monitor. It often is the first indicator to show an overbought or oversold signal. The RSI signal is still moving lower.
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 use for the 1 to 3 month S&P 500 chart when I have it set for daily views. The Fast Stochastic has an down signal in place.
Support Levels To Be Aware Of:
A bounce is possible off 2370 which is now the 21 day moving average. We saw a small bounce today.
The market has light support at the 2350, 2300 and the 2250 level. There is also light support at 2195 but better support is at 2180 and then 2150.
Stock Market Outlook for Tomorrow – Tuesday Mar 21 2017
The technical indicators are all negative and continuing to fall. None of them are showing strong signs of a bigger pullback just more weakness.
Tuesday should see more weakness and more sideways action. The morning looks particularly weak but we should still see an attempt to recover any weakness in the afternoon. A weaker close should be expected however, based on the technical indicators at the close of trading today.
The underlying current though is still up but choppiness and weakness is curtailing any advance at the present time.
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