I had expected the market on Monday to be stay more sideways than move lower. Instead between the Presidential Debate uncertainties from investors and the continuing Deutsche Bank scandal, investors were not in a buying mood and the market moved lower.
S&P Index Close
The S&P index close down below 2150 at 2146.10 for a loss of 18.59 points.
Dow Jones Index Close
The Dow Jones closed down 166.62 points to 18,094.83.
NASDAQ Index Close
The NASDAQ closed down 48.26 points to 5,257,49.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – Sep 26 2016
Stock Market Outlook: Chart Comments:
The SPX left behind another bearish candlestick for Tuesday, but the drop on Monday was emotional not fundamental. The index closed below the important 2150 valuation.
Monday’s drop placed the S&P below the 50 and 20 day moving averages and has the 20 day back falling.
The Lower Bollinger Band which was curling up and moving higher under the 100 day moving average is now falling away from the 100 day as it heads toward the 200 day moving average which is negative for stocks.
Meanwhile the 50 day moving average is starting to turn lower while the 100 and 200 day moving averages are still climbing.
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 is support which may have been broken on Monday.
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 but turned back negative on Monday.
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. The buy signal was not confirmed on Friday and again not 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 negative and falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative and falling.
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 down signal in place.
Stock Market Outlook for Tomorrow – Sep 27 2016
For Tuesday the day should start with a bounce. The first Presidential debate appears to have favored Senator Hillary Clinton. As the debate seemed to give a clear winner, many investors are pleased to get some kind of clearer indication of the Presidential race. This should assist in bouncing stocks higher.
Unfortunately though, the problems with financials, in particular Deutsche Bank will have a long shadow which will also be seen on Tuesday.
While there could be a decent bounce to start the day I am not expecting the bounce to be strong enough to send stocks roaring back to 2180. Instead the technical indicators are all negative which warns that a bounce will probably be a temporary reprieve from selling.
Tuesday therefore will probably see a bounce and a positive close but unless the financial stocks start to rally, the bounce will be short-term. For Tuesday look for stocks to bounce but close below 2170 or even 2165.
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