Stocks were expected to move sideways on Thursday and retain a bias to the downside ahead of Friday’s September employment numbers.
For the most part that’s what stocks did, despite oil rising above $50 (WTI) and closing above it for the highest level since June. This may draw in those short sellers who want to cover their position which could push oil higher next week.
The Weekly Initial Unemployment Insurance Claims on Thursday surprised economists as it reached the best level in 43 years, a sign that the economy may be at full employment. This coupled with the rise in oil had a lot of investors talking about a certain rate increase as oil should stroke inflation higher.
Friday’s jobs data is expected to show 175,000 new jobs created which if met is expected to push the US dollar higher and gold lower.
S&P Index Close
The S&P index closed up just 1.04 points to 2160.77.
Dow Jones Index Close
The Dow Jones closed down 12.53 points to 18,268.50.
NASDAQ Index Close
The NASDAQ closed down 9.17 to 5,306.85.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook -Oct 6 2016
Stock Market Outlook: Chart Comments:
Although the jobs numbers will primarily control market action on Friday the technical indicators are still worth a look.
The S&P broke below the 2160 level during the day and reached 2150.28 but still managed to recover to 2160 by the close. This left a bearish candlestick however and the index did break the 20 day simple moving average (SMA) in the morning although it closed above it by the end of the day.
The 20 day moving average continues to fall away from the 50 day moving average which is bearish.
The 100 and 200 day moving averages are still climbing and the Lower Bollinger Band that was moving lower is starting to turn back up. There is very little change overall to the chart from Thursday.
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 back negative but actually moving sideways for the past several days.
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 was very weak today.
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 back positive but 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 a down 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 7 2016
The market action on Friday will depend on the jobs numbers, but technically the market is continuing to show signs of weakness and yet recovers from dips.
The overall direction continues to point to higher for the market but without a catalyst to really get stocks juiced up, it will be difficult to break the present trading range the S&P is stuck in.
On Friday the jobs numbers will be the main driving engine for market movement but at some point the technical indicators will come into play and for now they are showing signs of weakness and bearishness. However next week is the unofficial start of the latest quarterly earnings, so any move lower on Friday may be recovered early next week as investors pin high hopes on the quarterly earnings season beating estimates and breaking the S&P to the upside.
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