The outlook forThursday was for stocks to once more try a rebound that would fail. Instead the emotions of investors moved from dismay over the higher chance of an interest rate rise in September to enthusiasm that there would not be an interest rate rise. The problem though is reports on Thursday which point to the likelihood of the Fed waiting longer, also point to a weaker economy despite the Weekly Initial Unemployment Insurance Claims on Thursday which continue to show a robust job market.
If indeed the economy is not “moving ahead” but is showing signs of slowing, then earnings in the next quarter may once again not be strong enough to push stocks higher. That means Thursday move up may not hold for very long. Let’s look at the technical indicators to see what they can advise us.
S&P Index Close
The S&P index closed up 2,147.26 for a gain of 21.49 points.
Dow Jones Index Close
The Dow Jones rose 177.71 points to close at 18,212.48.
NASDAQ Index Close
The NASDAQ moved up 75.92 points to close at 5,249.69.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – Sep 15 2016
Stock Market Outlook: Chart Comments:
The SPX rose from the 2125 level on Thursday and headed higher breaking through 2150 briefly. The closing candlestick is bullish for Friday.
The 20 day simple moving average (SMA) is at the 50 day and looks ready to cross below it which will be a sell signal.
All the major moving averages are continuing to climb.
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 rising.
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 weaker on Thursday.
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 rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative and rising.
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 a fairly strong up signal in place for Friday.
Stock Market Outlook for Tomorrow – Sep 16 2016
Technically there are 4 indicators that while negative are all starting to rise. One indicator, the slow stochastic is continuing to show lower while the Fast Stochastic has a fairly strong up signal in place for Friday.
Friday should be better for stocks unless the old fear of rising rates should resurface. Even if the market does not climb by much on Friday, there are enough indications to anticipate a positive close.
Caution is still warranted but Friday’s market action should set the tone for the start of next week.
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