You have to love the latest stock market outlooks. The yo-yo market we have been in is playing havoc with the technical indicators. Investor emotions are controlling market direction right now which means technical indicators are taking a “back-seat”. Monday investors were euphoric with Warren Buffett spending a billion dollars on Apple Stock. Today investors were running scared of possible Fed interest rate hikes. Fear levels were elevated further by two regional Fed presidents who suggested interest rate hikes were quite possible following the inflation data released today that showed a spike in April caused primarily by gasoline and rent price increases.
On Wednesday investors also get the FOMC latest minutes, which definitely had some worried about what the Fed might have to say tomorrow.
S&P Index Close
The S&P gave back yesterday’s big rally and closed down 19.45 points to 2047.21 for a loss of 0.94%.
Dow Jones Index Close
The Dow Jones fell 180.73 pointer a loss of 1.2%.
NASDAQ Index Close
Yesterday the NASDAQ had the best move higher and today it had the worst move lower, falling 59.73 points, wiping out Monday’s big gains and closing down at 4715.73 for a loss of 1.25% on the day.
Stock Market Outlook – Advance Decline Numbers
Volume rose by 600 million shares on Monday to 4.1 billion. This is typical of down days where we have been seeing more volume than on up days.
Of those shares traded 58% were lower by the close and 41% were higher. 62% of all stocks were falling. New highs fell back to 62 and new lows rose to 32.
The NASDAQ traded 2.2 billion shares on Tuesday with 60% of all volume moving lower. New highs were 37 down slightly from Monday New lows were lower again at 86 which is still better than last Thursday when the NASDAQ saw 109 new lows.
The volume numbers are still showing the same problem – lack of volume. This continues to hamper any efforts to push beyond 2100. Basically, investors are playing a wait and see approach for the market. They want someone else to be the buyer as the market heads to 2100. Those “someone elses” though, are nowhere to be found at present.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – May 17 2016
Stock Market Outlook: Chart Comments:
The S&P closed below the 20 day simple moving average and the 50 day moving average. Once again on Tuesday it bounced off the Lower Bollinger Band which often is a sign of strength. The closing candlestick however is bearish for Wednesday.
The 100 day has moved above the 200 day moving average which is a longer-term buy signal. The S&P is below the 2050 support level.
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 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 on April 22. The sell signal was weaker on Tuesday but in general the sell signal has not gained a lot of strength since April 22. Instead it is trending more sideways than either up or down. This indicates a sideways pattern with a bias lower.
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 negative and falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is 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 is signaling down 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 signaling down for stocks and is oversold.
Stock Market Outlook for Tomorrow – Wednesday May 18 2016
Technically the indicators are heavily slanted toward negative. There are no positive signals from the indicators for Wednesday. However the Fast Stochastic is oversold and the sell-off on Tuesday on the back of Monday’s big gain, shows that there is the possibility of rebound.
Wednesday action will be heavily controlled by the FOMC report.
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