Friday’s market rally was all about Deutsche Bank again, but this time in a positive way. Investors who had dumped stocks Thursday afternoon in a plunging market, were back buying on Friday as an number of analysts wrote positively about the bank and that the likelihood of a financial crisis due to Deutsche Bank’s woes, was next to zero. Others came out declaring that the fine imposed of 14 billion by the US Dept of Justice would be much smaller when finally worked out. By the end of the day on Friday, investors had recovered much o f the prior day’s loss.
S&P Index Close
The S&P index closed up 17.14 points almost recovering all the 20.24 points loss Thursday. It closed at 2168.27 but was above 2170 during the day.
Dow Jones Index Close
The Dow Jones rallied 164.70 points recovering much of Thursday’s 195.79 points loss. It closed at 18,308.15.
NASDAQ Index Close
The NASDAQ closed up 42.85 points also recovering much of the 49.39 point loss on Thursday. It closed at 5,312.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – Sep 30 2016
Stock Market Outlook: Chart Comments:
The S&P rose on Friday but still closed below the 50 day moving average but off the 20 day. It did not close at the highs for the day but it left a bullish candlestick for Monday. Often this type of candlestick is followed by a day of sideways motion.
The 20 day moving average continues to drop below the 50 day. The 100 and 200 day moving averages are still climbing but the Lower Bollinger Band is heading toward the 200 day moving average. If it crosses below, it will be a major sell signal.
The S&P did reach 2170 during the day but close just below it.
Stock Market Outlook: Support and Resistance Levels:
These are the present support and resistance levels.
The market was trying to build some support at the 2180 level. At present this is now resistance.
2160 is very light support.
2150 is support.
2125 is light support.
2100 is light support.
2090 is very light support.
2075 is also light support
Below that is 2050 which is light support.
2025 is better support than 2050 through to 2090.
2000 is primary support.
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.
Stock Market Outlook Technical Signals
Momentum: For momentum I use a 10 period when studying market direction. Momentum is rising but more sideways than up or down.
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 Thursday Sep 22. That buy signal remained weak on Friday despite the rally.
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 but also moving more sideways than up or down.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative and moving sideways.
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 in place.
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 has an up signal in place.
Stock Market Outlook for Tomorrow – Oct 3 2016
On the market outlook for Friday I indicated that any “positive” news on Deutsche Bank would see a relief rally. Normally relief rallies last a day or maybe two. Then the market must get some kind of other positive data or event to move it higher.
Many of the technical indicators on Friday were not supportive of the rally with 3 of them sitting sideways which indicates no real change expected in the market. Two have up signals and MACD which has a buy signal, actually lost strength despite the strong rally.
Monday then could see some weakness, especially around mid-morning as a rally might start the day but then weakness set in. I am not expecting a big move either up or down. The outlook is primarily sideways with no strong bias either up or down.
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