Friday saw a better rally as stocks shook off Wednesday’s fears and rallied higher. The rally was cut short in the afternoon, by rumors that an unnamed “person on interest” in the ongoing FBI “Russian investigation” was close to, or in the white House. But stocks still ended the day holding onto most of their gains.
S&P Index Close
The S&P index ended the day up 16.01 points to close at 2381.73
Dow Jones Index Close
The Dow Jones ended up 141.82 to close at 20,804.84
NASDAQ Index Close
The NASDAQ closed up 28.57 points to end the day at 6083.70
Stock Market Outlook
Chart Comments At The Close:
Despite the drop on Wednesday and then the rallies on Thursday and Friday, the S&P is still stuck in a trading range with 2395 to 2400 on the high side and 2350 to 2330 on the low side. The chart from Friday shows us that even with the buy signal caused by the 21 day moving average heading above the 50 day on May 9 and May 10, the market is stuck sideways. On Friday the S&P closed above the 50 period moving average but still below the 21 period moving average. The drop on Wednesday while severe as far as a one day drop is concerned, did not not break the lows from mid-April and mid-March of the 2330 level. Until that happens, the market remains in rally mode.
SPX May 19 2017 review
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative but is climbing.
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 May 17 2017. The sell signal continues to be reasonably strong.
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 climb.
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 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 moving sideways indicating no real change in pricing is expected.
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 bouncing higher from an oversold reading.
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.
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 – Monday May 22 2017
For Monday the technical indicators are still bearish despite the bounce on Thursday and bigger bounce on Friday.
Based on the technical indicators, Monday will see weakness but a move higher by the close could easily occur.
At this point in the rally, the market is heavily dependent on the news from Washington. Rumors negative to the President and his administration will result in stocks moving lower. Hints of a long awaited tax holiday to repatriate overseas earnings would boost stocks.
Any move higher on Monday should be treated cautiously until there are more technical signals supporting more upside. At present the technical indicators are still negative.
The outlook for Monday is for weakness but still holding a bias to the upside.
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