On Wednesday stocks were stuck in a see-saw but as energy prices fell the energy sector pulled back.
When inventories were four times higher than numbers forecast, many analysts complained they saw investors rush to try to unwind oil trade positions. Huge put buying positions were reported for the $50 and $51 put strikes for April and May positions. This sent a clear signal that traders expect oil prices to fall lower.
Added to this was a pullback by interest-rate-sensitive stocks ahead of an expected interest rate increase by the Federal Reserve for the middle of next week.
Today’s ADP private sector payroll numbers beat estimates of 190,000 for February to come in at 298,000. This stunned many analysts and indicated that the chance of a Federal interest rate hike was far more likely for the following week.
All of this brought stocks lower on Wednesday.
Let’s look at the closings on Wednesday and then take a technical overview.
S&P Index Close
The S&P index ended the day down 5.41 points to close at 2362.98
Dow Jones Index Close
The Dow Jones ended down 69.03 points to close at 20,855.73.
NASDAQ Index Close
The NASDAQ closed up 3.62 points to end the day at 5,837.55.
Stock Market Outlook
Stock Market Outlook review of Mar 8 2017
Chart Comments At The Close:
On Wednesday Mar 8 2017 the S&P traded still lower below the Upper Bollinger Band and left behind a bearish closing candlestick.
During the day it came close to the 2160 level which is just above where the 21 day moving average is trading. I am expecting a move that low will bring about a bounce.
It is still above the 21 day simple moving average (SMA) but just barely. The 21 day moving average is now near 2355 to 2358
The Lower Bollinger Band is almost ready to cross above the 50 day moving average and if it moves above it, it will be a bearish signal for the market.
The major moving averages are all still climbing which is bullish.
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is 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 sell signal Mar 7 2017. At the close of trading today the sell signal was confirmed.
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 now negative 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 moving sideways which indicates prices are not expected to fall much further.
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. RSI has fallen dramatically. It is still at readings that signal further weakness should be expected.
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 a down signal in place and is overbought.
Support Levels To Be Aware Of:
A bounce is possible off 2355 which is the 21 day moving average should the market fall that low.
The market has light support at the 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 – Thursday Mar 9 2017
The technical indicators continue to weaken. On Wednesday the sell signal from MACD was confirmed. The Ultimate Oscillator has also turned negative which is supportive of the market falling further. In general, all the technical signals are all pulling back, even those that have remained positive.
However losses over the past 3 days have not been large which keep alive the prospect that the market could bounce with any bit of positive news.
For Thursday, I am expecting the S&P to close the day negative. The bias for Thursday has shifted to lower.
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