Stocks have certainly not being co-operative the past two days. Today’s outlook was for some selling in the morning and then a rally back to try to close positive. Instead earnings from Macys and Disney clobbered the market and investors sold the retail sector lower. This then mushroomed into selling in almost all sectors until by the close almost the entire rally from Tuesday had been wiped out.
S&P Index Close
The S&P closed down 19.93 after rising 25.70 points on Tuesday. It closed at 2064.46.
Dow Jones Index Close
The Dow Jones closed down 217.23 points after rising 222.44 points on Tuesday. It closed back at 17,711.12.
NASDAQ Index Close
The NASDAQ fell 49.19 points after rallying 59.67 points on Tuesday. It closed at 4760.69.
Stock Market Outlook – Advance Decline Numbers
As has been happening all year, the volume on down days is exceeding rallies. Today’s volume jumped to 3.82 billion shares traded. Despite the huge plunge only 63% of all volume was to the downside. There were 139 new highs still which is down considerably from yesterday’s 251 new highs. New lows rose slightly from 21 yesterday to 29 today.
The NASDAQ traded 1.9 billion shares with 76% of all trades to the downside. New highs were 52 a slight drop from yesterday’s 58. New lows surprisingly were better today at 55 versus 70 yesterday.
There is no change in the volume comments. Volume continues to not point to any sustainable advance.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – May 11 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 50 day simple moving average (SMA) but back below the 20 day simple moving average (SMA). It is also below the 2075 level.
Surprisingly though, today’s plunge did not do much damage to the market. The 100 day is now on top of the 200 day moving average and by tomorrow may move above it. The 50 day is moving steadily higher as is the 20 day.
The closing candlestick on Wednesday is bearish for Thursday but can also signal a bounce in equities.
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 resistance. Below that is 2050 which is light support.
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 April 22. The sell signal was weaker again on Wednesday despite the selling.
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 turned is positive but falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive but also 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 is signaling up for stocks.
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 still at up but is ready to issue a short-term sell signal on Thursday if stocks do not recover.
Stock Market Outlook for Tomorrow – Thursday May 12 2016
The technical indicators at the close on Wednesday are not as poor as you might expect after a heavy day of selling. Instead what we have is almost an unchanged outlook. 2 are negative and 3 are positive. 1 is positive and ready to turn negative.
The S&P looks set to try to bounce in the morning, fail and either move sideways or retain a lower bias. I am of the opinion that the bias is lower but the past two days have not worked out as I anticipated in my stock market outlook.
For Thursday though I think the market will need more than one day to stabilize after the earnings misses from Macys and Disney. That leave Friday then as the possible up day for the market which is what the week ahead article this past weekend, predicted. Look for a bounce back attempt on Thursday. I believe though it will fail and the bias will stay lower for the S&P on Thursday.
Stay FullyInformed With Email Updates
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)
Market Direction External Links
IWM ETF Russell 2000 Fund Info
Market Direction SPY ETF 500 Fund Info