On Thursday the market dipped to the lowest level since March 24. Intraday the S&P fell to 2025.91. Investors continue to fear an interest rate hike from the Federal Reserve. With the US dollar moving higher and most commodities falling lower, investors decided to take profits or perhaps some losses and move cash to the sidelines. But overall the day could have been much worse and by the close, the markets were well off their lows for the day.
S&P Index Close
The S&P closed at 2040.04 down 7.59 points. This was within 4 points of the day’s high with all of the rallying action taking place in the afternoon after the market had reched 2025.91 in the late morning.
Dow Jones Index Close
The Dow Jones closed down 91.22 points at 17,435.40.
NASDAQ Index Close
The NASDAQ closed down 26.59 points to end the day at 4712.53.
Stock Market Outlook – Advance Decline Numbers
Volume on Thursday was lower by 300 million shares to 3.8 billion. Of those shares traded 64% were lower by the close and 36% were higher. 69% of all stocks were falling. New highs fell back to just 20 the lowest level in a more than a month. New lows rose slightly to 38 from yesterday’s 34.
The NASDAQ traded 1.7 billion shares which is low. 64% of all volume was moving lower and 35% was moving higher. 67% of all stocks listed on the NASDAQ were falling. New highs were unchanged from Wednesday at 21. New lows were up dramatically to 86.
Low volume on the sell-off often points to underlying strength. Down volume was strong was not at levels normally associated with a plunging market.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – May 19 2016
Stock Market Outlook: Chart Comments:
The S&P closed below the 20 day simple moving average and the 50 day moving average again today. It closed above the Lower Bollinger Band but during the day it reached to 200 day moving average from where it bounced back up.
The closing candlestick is often bullish for the next day.
The 100 day is still above the 200 day moving average which is a longer-term buy signal. The S&P is below the 2050 support level again but is still within 10 points of retaking it.
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 and may be come resistance shortly.
There is light support at 2025.
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 slightly negative but trying to climb back to positive.
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 weak again on Thursday and continues to point to a sideways pattern rather than a big up or down move for the market.
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 trying to rise.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative and falling which indicates prices in general are still moving lower.
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 and is nearing oversold.
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 neutral to down for stocks and is oversold. A rally on Friday could generate a buy signal from the Fast Stochastic.
Stock Market Outlook for Tomorrow – Friday May 20 2016
Technically the indicators are still slanted to negative as they have been for quite a few days but there are some signs of a possible bounce higher by the close of trading on Thursday.
The market may try to retake the 2050 level on Friday. The day should be choppy and there will be dips, but there is a good chance of a bounce. Weakness remains dominant however so following a bounce we could see more downward pressure.
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