Summary:
On Friday May 4, the jobs numbers were seen by most investors and analysts as proof that the Fed would raise interest rates only slowly through 2018. This was based on the report showing a wage gain of just 0.01 percent for the month of April.
Stocks moved higher by mid-morning and then held the gains into the close. It was a strong day although the week still ended with losses for the Dow Jones and S&P Indexes. The NASDAQ for the week rose 100 points.
Closing Statistics from Friday May 4 2018
The S&P rose 33.69 to 2663.42 added 1.28%.
The NASDAQ Composite rose 121.47 to 7209.62 for a 1.71% gain.
The Dow Jones Industrial Average rose 332.36 closing at 24,262.51 for a gain of 1.39%.
Stock Market Outlook Chart Comments At The Close on Friday May 4 2018
The S&P rallied off the 200 day moving average on Friday pushing above the 21 day and closing at the 100 day moving average. It left behind a bullish candlestick to start off the week.
The 200 day moving average is still climbing while the 50,100 and 21 day are still falling.
The 50 day moving average is still leading the market but it is continuing to fall toward the 100 day which is bearish. The 100 day is trending sideways but the 21 day is turning back up.
Stock Market Outlook review of May 4 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative and rising.
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 down signal on May 2. On Friday the down signal was very weak and could issue an up signal on Monday should the index move higher.
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 positive and rising.
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 up for Monday.
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 rising.
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 neutral.
Support Levels To Be Aware Of:
2745 to 2750 was light support
2710 was light support.
2700 was support.
2675 was light support.
2650 was light support
2620 is light support
2600 is good 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 7 2018
For Monday the technical indicators have shifted primarily back to up. MACD is still holding a very weak down signal, but the remaining indicators except for the Rate Of Change are all pointing higher for the start of the week. The Rate Of Change is neutral.
The SPX chart is more bearish than the technical indicators are. Monday should see the S&P try to build more strength and move higher.
After the large bounce on Friday there should be some selling as some profits are taken. However based on the technical indicators, any selling would be an opportunity to set up more trades as the index looks steady enough to climb higher for Monday and the start of the week.
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