Summary:
Wednesday was a choppy day with wide swings in the indexes. At one point the S&P broke to 2612 and investors worried the index was going to fall lower. Instead buyers showed up and the index moved back higher again.
Stocks remain range bound heading into the final two days of trading.
Closing Statistics from Wed Apr 25 2018
The S&P rose 4.84 points to 2639.40 gaining 0.18%
The NASDAQ Composite fell 3.62 points to 7003.74 down 0.05%
The Dow Jones Industrial Average rose 59.70 points to 24,083.83 gaining 0.25%
Stock Market Outlook Chart Comments At The Close on Wed Apr 25 2018
The chart is bearish as of the close on Wednesday. The index fell through the 50 and 100 day moving averages and closed below them and the 21 day moving average.
While the 21, 50 and 100 day moving averages are still falling, the 200 day is still rising. The 50 day moving average is leading the market while the 100 day is not far below. The 21 day continues to drift lower but does not look like it will cross below the 200 day moving average this week.
The Bollinger Bands Squeeze is continuing to develop and it still looks like it will probably send stocks lower.
Stock Market Outlook review of Wed Apr 25 2018
Stock Market Outlook: Technical Indicators Review:
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 buy signal on Apr 11. The buy signal weakened further on Wednesday.
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 signal is negative but 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 for Thursday.
Relative Strength Index: The relative strength index is set for a period of 5 which gives it 5 days of market movement to monitor. It is often the first indicator to show an overbought or oversold signal. The RSI signal is lower and moving sideways.
Rate of Change: Rate Of Change is set for a 21 period. This indicator looks back 21 days and compares price action from the past to the present. With the Rate Of Change, prices are rising when signals are positive. Conversely, prices are falling when signals are negative. As an advance rises the Rate Of Change signal should also rise higher, otherwise the rally is suspect. A decline should see the Rate Of Change fall into negative signals. The more negative the signals the stronger the decline. The rate of change is negative and falling.
Support Levels To Be Aware Of:
2745 to 2750 was light support
2710 was light support.
2700 is support.
2675 is light support.
2650 is light support and 2620 is also light support.
2600 is good support.
There is good support at the 2550 level from where the market bounced back from the recent correction on Feb 9.
The S&P has light support at 2480. It also has light support at 2450 and good support at 2425. Below that there is some support at 2400, 2380, 2350. 2300 has the most support at present but would represent a full correction as a drop to this level would be 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Thu Apr 26 2018
The technical indicators continue to weaken. All are negative except for MACD which is still positive although it is almost ready to issue a sell signal.
All the other indicators are negative or weak.
Overall the movement on Wednesday in the S&P was not encouraging. For Thursday there could be a bounce, especially in the morning or mid-morning but the close still looks negative as the S&P remains range bound.
The outlook then is for the possibility of a bounce but then a move lower.
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