Weakness in stocks was anticipated for Friday. I did however think the market would close slightly higher. Instead the market face declining European bank shares, declining oil price and a rebound in the US dollar against most major currencies.
S&P Index Close
The S&P index closed down half a percent for a loss of 12.49 points to close at 2164.69, below the important 2170 level.
Dow Jones Index Close
The Dow Jones closed down 131.01 points for a loss of 0.71% to close at 18,261.45.
NASDAQ Index Close
The NASDAQ closed own 33.78 points to 5305.75 after making new all-time high on Thursday Sep 22.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – Sep 23 2016
Stock Market Outlook: Chart Comments:
The SPX pulled back from the two-day rally on Friday. The pullback left a bearish candlestick for Monday.
The 20 day simple moving average (SMA) is below the 50 day which is a short-term sell signal. On Friday the S&P fell to the 20 day moving average and then bounced off of it to close above it and at the 50 day moving average.
The Lower Bollinger Band is still 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 finally turned positive on Friday.
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. On Thursday sep 22 it issued a weak buy signal. That signal had another weak positive signal on Friday but not strong enough to confirm Thursday’s buy signal. We will have to see what Monday brings.
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 26 2016
For Monday we could see some weakness to start the day off and then a sideways move ahead of Monday night’s Presidential Debate. The underlying bias is still to the upside for stocks however.
The pullback on Friday was anticipated and as long as the S&P holds the 2150 level the rally will hold. A break below 2150 and the rally may turn lower.
On Monday I am not expecting the S&P to break below or even down to the 2150 level.
With momentum finally positive, Monday’s action will be important in determining if the rally will last into the start of the next quarterly earnings.
MACD issued a buy signal on Thursday but it was not confirmed on Friday. We will have to see how MACD readings are by the close of trading on Monday.
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