What Happened Wed Mar 14 2018
Wednesday was another day when stocks opened with a jump and then spent the remainder of the day falling. By the close the Dow had been down over 300 points and closed down 248 points. The NASDAQ held up quite well and closed down just 14 points. The S&P on the other hand slipped back to 2745 and basically wiped out the second leg from the recovery rally from March 9. It closed down 15.83 points.
Closing Statistics for Wed Mar 14 2018
S&P 500 Index Close
The S&P index ended down 15.83 to 2,748.48
Dow Jones Index Close
The Dow Jones ended down 248.91 to 24,758.12
NASDAQ Index Close
The NASDAQ closed down 14.20 to 7,496.81
Stock Market Outlook – Review of Wed Mar 14 2018
Chart Comments At The Close:
Despite a second day of weakness, the S&P chart still points more to a bit of weakness rather than a big drop coming. The SPX still looks stuck in a range of 2700 on the low and 2800 to the high. The index on Wednesday fell to the 50 period SMA but failed to close below it.
Meanwhile the 21 day moving average is still climbing, the 100 and 200 day EMA are still climbing. The Bollinger Bands Squeeze is still in play but all indications from the squeeze to the close on Wednesday, point to the index breaking to the upside.
Stock Market Outlook review of Wed Mar 14 2018
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive 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 March 5. The buy signal is weaker on Wednesday but still holding a fairly strong buy signal.
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 but 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.
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 moving lower.
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 positive and falling which indicates lower prices are expected.
Support Levels To Be Aware Of:
2710 is light support.
2700 is good support.
2675 is light support.
2650 is light support and 2620 is also light support.
There is good support at the 2550 level from where the market bounced back from the recent correction.
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 Mar 15 2018
Technical indicators are shifting their bias to the downside for the short-term. Overall though the indicators are not overly bearish despite two days of selling.
There are no technical signals that are overly negative and only the Slow Stochastic has a down signal in place.
All the other indicators are pulling back but they don’t show a big drop will happen any time soon.
Thursday looks steadier than either Monday or Tuesday were. We should see an attempt to move higher on Thursday near the open. Then we should have another test of 2750 to 2745, before the markets decide whether to move up or down for the day.
While two days of selling is not enjoyable by any stretch, there are no signals that advise us a big drop is imminent. Instead this looks more like investor angst over the firing of Tillerson and the uncertainty of a possible global trade war, particularly with China.
This is keeping investors nervous and that means taking profits where they can be taken. Thursday we could see the market try to close positive, but the technical indicators are advising that the market will be lower again on Thursday.
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