The stock market outlook for Wednesday was for stock to move higher. I had thought they would take out the 2080 level and close below 2090. But the rally continued with a degree of strength and instead pushed beyond 2090 and then closed at 2090.
The rally continued on Thursday as investors believe Britain will vote to stay in the EU and an IMF bailout package for Greece seems to be set to be implemented. It is believed this latest bailout package will end the problems Greece has been facing. I have been writing about the Greek Debt Crisis since May 2011. Here is the first article I wrote. Now 5 years later it is questionable whether this really is the “beginning of the end” as the IMF and the ECB believe.
Gold was lower today although Barrick Gold Stock (ABX) closed up 2.19% at $17.28. The GLD ETF however closed down 32 cents at $116.98 it lowest level since it reached $115 intraday on April 7. Energy and banks were all higher with Exxon Mobil Stock closing at $90.26 up 0.66% today and near their 52 week high of $90.40.
S&P Index Close
The S&P closed at 2090.54 up 14.48 for the day.
Dow Jones Index Close
The Dow Jones closed up 145.46 points at 17,851.51 and within 150 points of 18000 again.
NASDAQ Index Close
The NASDAQ closed up 33.83 at 4,894.89.
Stock Market Outlook – Advance Decline Numbers
Volume on Wednesday reached 3.8 billion shares by the close. This was a bit better than previous sessions. 78% of all volume traded on New York was to the upside and 66% of all stocks were climbing. There were 88 new highs and 11 new lows.
The NASDAQ traded 1.74 billion shares which is below average. 70% of all volume was moving higher. 60% of all stocks listed on the NASDAQ were rising while 36% were falling. New highs rose to 101 among the best showings this year for the NASDAQ. New lows were 28.
Another day of mediocre volume is not adding strength to the outlook for the rally to break decisively through the 2100 level.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – May 25 2016
Stock Market Outlook: Chart Comments:
The S&P closed on Wednesday above all major moving averages at slight above the Upper Bollinger Band. Almost always it will pullback after pushing through the Upper Bollinger Band, even if for only a short few hours on Thursday.
The SPX continues to be led by the 50 day, 100 day and then 200 day which is a signal that the market will move higher.
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 and may have become support. Below that is 2050 which is light support.
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 finally positive on Wednesday.
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. Today after weeks of very weak sell readings, the MACD indicator issued an unconfirmed buy signal.
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 rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative to neutral and unchanged.
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 for Thursday.
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 up for stocks for Thursday and showing readings of being overbought.
Stock Market Outlook for Tomorrow – Thursday May 26 2016
Technically the indicators are pointing to the index continuing its advance. However the next two days are the final days of the week prior to the long Memorial Day Weekend. Normally the Friday is weak and ends lower on light volume. The Thursday is often sideways. The outlook for Thursday after the big gains made is for the market to try to advance buy probably not get too far.
I am expecting a choppy day on Thursday and perhaps a close that is somewhat neutral with the bias to a bit more upside. A close around 2092 would not be unexpected heading into Friday before the long weekend.
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