Stock Market Summary for Fri May 18 2018
Friday was all about chipmakers dropping lead lower by Applied Materials Stock (AMAT) which fell 8.25% as fears rose again that demand for chips will be falling this year. Somewhat surprisingly, banks also pulled back despite the almost sure probability of higher interest rates which will translate into higher earnings for banks. Boeing stock (BA) advanced 2% to 351.23 and analysts came out with reports estimating Netflix Stock (NFLX) will rise to $375 to $400 this year.
Closing Statistics from Fri May 18 2018
The S&P fell 7.16 to 2712.97
The NASDAQ Composite fell 28.13 to 7354.34
The Dow Jones Industrial Average rose 1.11 to 24,715.09
Stock Market Outlook Chart Comments At The Close on Fri May 18 2018
The S&P closed almost unchanged on Friday, down just 7 points to 2712 but still above 2700 in what was a choppy day of trading.
The trading action on Friday pushed the 21 day moving average above the 100 day for a new up signal on the markets. The 21 day is now at the 50 day. A move above the 50 day moving average will be a strong up signal for the index when it happens.
Friday’s closing candlestick is neutral for Monday.
The chart continues to be bullish with the S&P still above 2700.
The 200 day moving average is continuing to rise.
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and falling.
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 an up signal on May 7. The up signal was still fairly strong on Friday.
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 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 signal is neutral for Monday and still overbought.
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 is often the first indicator to show an overbought or oversold signal. The RSI signal is falling.
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. With the Rate Of Change, prices are rising when signals are positive. Conversely, prices are falling when signals are negative. As an advance rises the Rate Of Change signal should also rise higher, otherwise the rally is suspect. A decline should see the Rate Of Change fall into negative signals. The more negative the signals the stronger the decline. The rate of change signal is trending sideways.
Support Levels To Be Aware Of:
2745 to 2750 was light support
2725 was light support.
2700 is support.
2675 is light support.
2650 is light support
2620 is light support
2600 is strong support.
There is good support at the 2550 level from where the market bounced back from the recent correction low on Feb 9.
The S&P has light support at 2480. It also has light support at 2450 and good support at 2425. Below that there is some support at 2400, 2380, 2350. 2300 has the most support at present but would represent a full correction as a drop to this level would be 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Mon May 21 2018
For Monday, the outlook has not changed a great deal. The 21 day moving average climbing above the 100 day is a strong indication that the S&P intends to continue to advance.
Technically there are three falling signals, 1 neutral signal, 1 sideways and 1 buy signal. Of the falling signals only 1 is negative.
All the other signals, while weaker, are still pointing to a higher market shortly. On Monday we should see the S&P try to close higher despite weakness continuing to plague the market. As long as the S&P holds above 2700 the next move should be higher.
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