Friday May 12, marked the end of trading for the second week of May. Now midway through the month and with the index still within a mere handful of points of making a new highs, Friday saw a slight loss for the S&P and Dow but a gain for the NASDAQ.
Let’s review the closing numbers and then take a technical outlook of the S&P.
S&P Index Close
The S&P index ended the day down 3.54 points to close at 2390.90
Dow Jones Index Close
The Dow Jones ended down 22.81 at 20,896.61
NASDAQ Index Close
The NASDAQ closed up 5.27 points to end the day at 6121.23.
Stock Market Outlook
Chart Comments At The Close:
The market continues to move sideways, but as you can see in the chart below the index is starting to slip. Despite this slipping, there was a new buy signal created when the 21 days moved back above the 50 day moving average on May 8. That negates the prior sell signal from mid-April. In the chart below you can also see that the Lower Bollinger Bands has now moved back above the 100 day moving average signaling that stocks are not expected to fall lower.
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum remains positive but at 100.28 it is an almost flat reading. Momentum could turn negative next week.
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 Apr 24 2017. The buy signal was almost gone on Friday by the close.
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 falling slightly but still showing strength.
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 fairly strong down signal in place for the start of the week.
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 and staying sideways which confirms what we are seeing in the market itself, namely a sideways pattern.
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 negative and has fallen dramatically over the past few trading days and is now below 50 in its readings, which signals further downside is 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 weak down signal in place and is showing the market as extremely overbought.
Support Levels To Be Aware Of:
The market has light support at the 2380 level, 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 – Mon May 15 2017
For Monday the signals all point to more sideways action, but with a bias to the downside. Nothing large is expected for downside moves, however the signals continue to deteriorate. Unless more of the signals can turn up, the upcoming week could see lower prices.
For Monday I am expecting the market to move sideways and lower. The bulls need a new catalyst to the upside to continue the rally.
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