Two events seemed to weigh on investors today. The first was the increased bid by Bayer for Monsanto. This kind of buy-out activity always gets investors interested in owning equities as large buyouts tend to show that there is confidence in the market place and in stock ownership by other corporations. This confidence is often key for a lot of investors to risk capital in stocks.
The second was a weaker than anticipated reading on the US Services Sector in August which many analysts on Tuesday believe will keep the Fed from raising interest rates in September.
S&P Index Close
The S&P index had a see-saw morning but by the close it rose 6.5 points to close at 2186.48.
Dow Jones Index Close
The Dow Jones gained 46.16 points to close at 18,538.12. Coupled with Friday’s gain the Dow is up more than 100 points in two trading days.
NASDAQ Index Close
The NASDAQ gained 26.01 points which was better than Friday’s advance. This was a rise of 0.49% to close at 5,275.91.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Sep 6 2016
Stock Market Outlook: Chart Comments:
The SPX at the day’s high and above the 20 day simple moving average (SMA). It reached the Upper Bollinger Band. The closing candlestick is bullish, but often the following day will see weakness to start off the trading session, so be aware Wednesday morning could see a bit of selling at some point.
All the major moving averages are continuing to climb although the 200 day moving average and now the 100 day moving average are both starting to turn sideways as the market continues to move sideways,albeit with an upward bias.
You can see the Bollinger Bands Squeeze is continuing to tighten but a change is expected this week.
Stock Market Outlook: Support and Resistance Levels:
These are the present support and resistance levels.
The market is trying to build some support at the 2180 level.
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 more neutral than 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. That sell signal was active weaker on Tuesday.
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 rising.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is neutral to positive but indicating no real change in prices is expected.
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 Stochasticis has an up signal in place.
Stock Market Outlook for Tomorrow – Sep 7 2016
For Wednesday Sep 7 2016 I am expecting the market to be weak in the morning and then move higher in the afternoon and close above or near the 2190 level.
Technically only one indicator, MACD is actually negative. All the other technical indicators are positive though two are barely, Momentum and Rate Of Change. Momentum being neutral is understandable as the market is drifting rather than actually moving up or down.
The Rate Of Change is a bit more worrisome as it continues to indicate that no real change in prices is expected which means the market might try to recover the old highs but may have a very limited chance of moving much beyond them.
Technical indicators though can change quickly and both stochastic indicators are showing strong up moves coming for the S&P. Therefore we should expect to see some weakness but overall the market should continue its weak advance.
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