Tuesday saw the indexes experience some profit-taking as investors enjoyed profits after the strong run-up in the indexes to new all-time highs. With the Dow above 19000 and the S&P above 2200, even the European markets joined the rally.
One area of the markets that fell today was healthcare. Most healthcare stocks have enjoyed the rally following Trump’s election victory, but today they were off 1.4 percent as a group.
Oil ended the day almost unchanged despite rallying in the morning and then falling back in the afternoon with no news on a production cut agreement from OPEC. The dollar was steady.
S&P Index Close
The S&P index gained 4.76 points to close at a record 2202.94 near the intraday high of 2204.80
Dow Jones Index
The Dow Jones rose 67.18 points to a new closing high of 19,023.87.
NASDAQ Index Close
The NASDAQ rose 17.49 points to a new all-time closing high of 5,386.35.
Stock Market Outlook
Chart Comments At The Close:
Stock Market Outlook – End of day Nov 22 2016
The S&P ended the day above 2200 for the first time in its history. During the day it tested the 2195 level without a problem and renewed volume helped push the index above 2200. The move higher was small and it left a spinning top candlestick which is a signal of indecision. Tomorrow could see the market experience more weakness again however ahead of the holiday on Thursday it is unlikely the market will be lower. A sideways day may develop.
The Bollinger Bands are moving widely still indicating as explained yesterday, that the rally is not broad in its scope and many stocks are not participating.
The 20 day simple moving average (SMA) is now at the 50 day simple moving average (SMA). Once it crosses over it, this will be another buy signal. All the major moving averages are back climbing, another good sign for the bulls.
Technical Indicators Comments At The Close:
Technical indicators at the close Nov 22 2016
Momentum: For momentum I use a 10 period when studying market direction. Momentum is still strong but it is continuing to decline ahead of the Thanksgiving holiday.
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 buy signal on Nov 9. The buy signal remains strong but as you can see in the chart it is back rising.
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 is still signaling up and shows the market as extremely overbought. If there is selling on Wednesday and a lower close the Fast Stochastic will issue a sell signal.
Relative Strength Index (RSI) : For the Relative Strength Index (RSI) I use a period of 5 which is a week of activity and is often quite accurate. The RSI is still pointing to the market as extremely overbought which is often followed by a pullback. On Tuesday it was higher but the signals themselves are now more sideways than higher. The market could dip at any time.
Technical Indicators at the close Nov 22 2016
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 still showing the market as overbought and it is trending sideways.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and again while it turned lower today it is actually moving sideways and more unchanged than up or down.
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 to neutral signal in place again for Wednesday. It is extremely overbought and the signals are so close that any amount of selling on Wednesday will see the Slow Stochastic issue a sell signal.
Stock Market Outlook for Tomorrow – Nov 23 2016
Tuesday’s market action as more in keeping with an overbought market taking some profits. The market dipped to 2195, held that level easily and moved higher by the close, albeit by just a few points. Overall it was a good day for the market as the test of strength was done without a problem, indicating there is still buying interest among investors.
On Wednesday, the technical indicators still point to an extremely overbought market so another dip could happen at any time, but ahead of the Thanksgiving holiday on Thursday, a drop is unlikely. Instead a sideways day is expected with a slightly positive close.
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