The outlook for Tuesday was for stocks to move back down following Monday’s rally. The drop on Tuesday was assisted by a drop in oil of 3 percent to close at $44.90 (WTI) on the back of bearish outlook for oil inventories and demand right through 2017. As well a rise in the US dollar assisted in pushing oil lower than it may have experienced. Financial stocks seemed to lead the decline on Tuesday as fear of continued low-interest rates seemed to impact a lot of investors outlook for earnings from financial institutions. Wells Fargo drop on the continued scandal over “fake accounts” being setup to meet product sales goals which were scrapped on Tuesday by head office. Representatives of the bank will appear before a Senate panel next week. All of this assisted the resumption of Friday’s sell-off although technically the indicators on Monday after the close, pointed to Monday’s rally as being a one day affair.
S&P Index Close
The S&P index closed down 1.48% giving back all of Monday’s rally. The drop was 32.02 points versus Monday’s 31.23 gain. The close was at 2127.02 near the important 2128 valuation.
Dow Jones Index Close
The Dow Jones followed the S&P and closed down 1.41% versus Mondays rise of 1.32%. It closed down 258.32 points to 18,066.75. During the day it was as low as 18,028.06. It is now within easy reach of falling below 18,000.
NASDAQ Index Close
The NASDAQ had the best day of the three indexes losing 1.09% versus Monday’s gain of 1.68%. It lost 56.63 points which was less than Monday’s gain of 85.98 points. It closed at 5,155.25.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Sep 13 2016
Stock Market Outlook: Chart Comments:
The SPX fell back on Tuesday wiping out Monday’s gain and leaving the index pretty well where it ended on Friday. The index closed at the 100 day moving average but broke through it several times intraday. That will setup the S&P to move below the 100 day moving average as early as Wednesday.
The candlestick at the end of the day is bearish for Wednesday.
All the major moving averages are continuing to climb but the 20 day is now falling rapidly and could shortly cross over the 50 day moving average which would be a short-term sell-signal.
The Bollinger Bands Squeeze from the summer months is now ended.
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 was very light support.
2150 was 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 negative and back falling.
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 August 1. That sell signal was stronger on Tuesday indicating more downside lies ahead.
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 negative and falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative and falling indicating lower prices are coming soon.
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 for Wednesday. As it looks out more than a single day, it could be advising that we will see more weakness toward the end of the week.
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 is signaling down for Wednesday and is oversold.
Stock Market Outlook for Tomorrow – Sep 14 2016
For Wednesday Sep 14 2016 we could see another rally attempt but it will fail again. Overall there is probably little chance of any kind of sustained rally at this point. Monday’s rally couldn’t hold and the market is now in a downturn for Wednesday and probably Thursday. Friday could see an attempt at a pop.
Wednesday then could see the market open slightly up, trend sideways for perhaps as much as half an hour and then fall lower. The close should be lower than today.
Caution is warranted following the decline on Tuesday that wiped out Monday’s rally. The hope for a short-term pullback now rests with the NASDAQ index which failed to give back all of Monday’s rally. Attention should be focused on the NASDAQ for Wednesday.
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