What Happened On Wed Jan 3 2018
Wednesday saw the rally from Tuesday continue. By the close, the S&P had added 1.4% over the past two days, keeping intact the theory behind the Santa Claus Rally for another year. The S&P rose above 2700 for the first time and both the Dow and NASDAQ made new highs. The Dow is within 78 points of breaking through 25,000.
Markets also had a slight boost from Fed minutes that show no change in the outlook from the Fed and no change from gradual interest rate hikes in 2018. December factory date came in stronger than expected and reports from Europe also showed strength growing in manufacturing. Among Wednesday’s biggest gainers were NVIDIA, Alphabet, IBM, Micron and AMD while Intel Stock collapsed over 6% at one point before closing down 3.4%. All of this on the news of a report of a design flaw in its chips. Oracle (CRM) was upgraded by Morgan Stanley.
Closing Statistics for Wed Jan 3 2018
S&P 500 Index Close
The S&P index ended up 17.25 to 2,713.06
Dow Jones Index Close
The Dow Jones ended up 98.67 to 24,922.68
NASDAQ Index Close
The NASDAQ closed up 58.63 to 7,065.53
Stock Market Outlook – Review of Wed Jan 3 2018
Chart Comments At The Close:
The rally on Wednesday pushed the index to close at the Upper Bollinger Band. Often a move to the Upper Bollinger Band into the close, will see a dip to start the following day or a dip into the close on the following day. The candlestick at the close was bullish. The 50 day moving average is still just below the Lower Bollinger Band which is still bullish. All the major moving averages are still climbing which is also bullish.
Stock Market Outlook Thu Jan 4 2018
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and once again pretty well unchanged.
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 Dec 27 which was confirmed on Dec 28. Today there was a neutral signal at the end of trading.
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 positive 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 is overbought and holds an up 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 often is the first indicator to show an overbought or oversold signal. The RSI signal is rising into overbought.
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. The rate of change signal is positive and starting to rise.
Support Levels To Be Aware Of:
The 2620 is light support.
There is good support at the 2550 level.
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 almost 15%.
Stock Market Outlook for Tomorrow – Thu Jan 4 2018
The technical indicators are all positive but they are a bit mixed. MACD is neutral after the two-day rally wiped out its sell signal from the end of December. All the other indicators are trying to rise and there are now overbought signals from RSI and the Slow Stochastic but there is still room for the market to push higher. We could see some dips on Thursday early in the trading session. The outlook though is still higher which means any dips are still trading opportunities. Thursday should close still higher.
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