On Friday Nov 3 2017, the markets took part of the morning to digest the October non-farm payroll numbers that were less than expected. By late morning most investors had decided that 261,000 jobs created was still a strong enough number and they returned to buy stocks sending all 3 indexes higher. By the end of the day all 3 indexes closed at all-time highs.
S&P 500 Index Close
The S&P index ended up 7.99 to 2587.84
Dow Jones Index Close
The Dow Jones ended up 22.93 to 23,539.19
NASDAQ Index Close
The NASDAQ closed up 49.49 to 6764.44
Stock Market Outlook
Stock Market Outlook for Mon Nov 6 2017
Chart Comments At The Close:
There were changes on Friday Nov 3 to be aware of. The Bollinger Bands Squeeze is starting to end. You can see that the Upper Bollinger Band is turning high and the Lower Bollinger Band is turning lower. While no clear signal the outlook is more to the upside out of the latest Bollinger Bands Squeeze than to the downside. The closing candlestick on Friday is bullish but with markets closing at all-time highs once again, normally we will see some selling on Monday as investors take profits and increase their cash levels.
The support level at 2550 has enough strength to slow a pullback probably for at least a day. The 234 level is still the “line in the sand” at the moment for the rally.
All the major moving averages are continuing to move higher. The S&P closed the day on Friday at the Upper Bollinger Band which is often a bullish sign but be aware that market could turn sideways following the new highs on Friday.
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and although down slightly on Friday it is almost unchanged.
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 Oct 24. The sell signal was weaker on Friday but still negative.
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 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 has an up signal 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 often is the first indicator to show an overbought or oversold signal. The RSI signal is rising and moving into overbought readings.
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 moved slightly lower.
Support Levels To Be Aware Of:
There is support building at the 2550 level which could assist in pushing the index higher into November.
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.
Stock Market Outlook for Tomorrow – Mon Nov 6 2017
Friday saw some interesting technical signals. MACD refused to turn positive despite the new all-time high on Friday. It was weaker, but still holding a negative reading.
The Ultimate Oscillator failed to change at all on Friday despite the market moving higher. This is somewhat negative for Monday.
The Rate Of Change continued to move lower which signals lower prices are expected.
Relative Strength Index (RSI) move higher while the Slow Stochastic has an up signal in place for Monday.
In short, we have a very mixed outlook for Monday despite Friday’s advance.
The outlook for Monday then is mixed. We should expect some selling off the new all-time highs but the chance for a positive close is still with the markets.
What investors could see is a split on Monday with the S&P closing flat to lower but the NASDAQ closing higher. This is just a personal observation and not based on technical indicators. Overall even if Monday is negative, the outlook is still higher so a negative day on Monday is another opportunity to setup trades.
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