The Fed rally from Wednesday afternoon continued on Thursday and the S&P tried three times to break through 2180. Oil rose on more chatter from OPEC and Algeria. The dollar fell back on the decision not to raise interest rates.
The various Fed Watch sites now rate the likelihood of a December rate hike as anywhere from 54% to 62% depending on the site visited. Fed Chair Janet Yellen strongly indicated a possible tightening of monetary policy by year end. Many of the Fed prediction sites though, reduced their outlook for a rate increase in December. For example RBC Global Asset Management in Chicago indicated they felt the Fed was less hawkish than expected.
Amazon Stock (AMZN) rose to a new all-time high on a price target raise by BMO, closing above $800 at $804.70. The stock is now trading at an incredible 196.9 times price to earnings and 41.1 times price to cash flow. Book value is at $28.42 and cash flow is $18.96 a share. Earnings are $4.01 a share.
S&P Index Close
The S&P index closed up 14.06 points for a gain of 0.65% to 2,177.18.
Dow Jones Index Close
The Dow Jones closed up 98.76 points to 18,392.46.
NASDAQ Index Close
The NASDAQ moved higher by 0.84% to climb 44.34 points to a new closing higher of 5339.52.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – Sep 22 2016
Stock Market Outlook: Chart Comments:
The SPX rally continued with the S&P closing just below the important 2180 level. Before the most recent pullback, the S&P was trying to build a base of support at 2180 to move higher. That support is now resistance and three times today the S&P tried to break through. It failed but did close just below 2180.
This left a bullish candlestick for Friday.
The 20 day simple moving average (SMA) is below the 50 day which is a short-term sell signal. However the Lower Bollinger Band is under the 100 day moving average which supports an outlook of a move higher for the index.
All the major moving averages are continuing to climb.
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 negative and rising but even two days of the market rallying strongly has not changed momentum to positive.
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. Today, Sep 22 MACD issued an unconfirmed buy signal.
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 and unchanged.
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 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 – Sep 23 2016
For Friday we could see the market pullback a bit after two days of rallying. That though will not end this rally. The close for Friday still appears higher. I am expecting the S&P to break through the 2180 in the morning but profit-taking will push the S&P lower, perhaps to 2170 or 2173. The close still looks positive.
The main culprit is momentum which remains uncommitted to the rally despite two days of the market climbing.
MACD issued a new buy signal today at the close. It is weak at a reading of just 0.22 but it may get confirmed on Friday.
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