What Happened Wed Mar 7 2018
Wednesday markets opened lower on concerns over the resignation of Gary Cohn, top economic advisor in the Trump administration. Overnight the futures had pointed to a strong gap down opening. Markets did open lower, rallied and then retested the lows over the lunch hour. When the retest held the S&P above 2700, buyers flocked in and the S&P moved higher turning positive near the closing and then slipping to end the day slightly negative. The Dow was down modestly while the NASDAQ recovered all its losses and ended positive on the day.
Closing Statistics for Wed Mar 7 2018
S&P 500 Index Close
The S&P index ended down 1.32- to 2,726.80
Dow Jones Index Close
The Dow Jones ended down 82.76 to 24,801.36
NASDAQ Index Close
The NASDAQ closed up 24.64 to 7,396.65
Stock Market Outlook – Review of Wed Mar 7 2018
Chart Comments At The Close:
The chart continues to point to the S&P remaining range bound rather than a rest of the early Feb lows or the lows of Mar 2.
The SPX on Wednesday bounced off the 21 day moving average and closed below the 50 day after almost reaching it toward the end of the day. It left behind a bearish candlestick for Thursday.
The 21 day moving average is continuing to fall. The 50 day moving average is starting to turn lower while the 100 day and 200 day are still climbing.
A Bollinger Bands Squeeze is forming which might be seen by the end of this week. The Bollinger Bands Squeeze may end up with the SPX moving higher.
Overall the chart is still fairly bullish for Thursday following the morning drop on Wednesday which was recovered.
Stock Market Outlook review of Wed Mar 7 2018
Stock Market Outlook: Technical Indicators:
Technical indicators are turning back bullish after Wednesday’s dramatic recovery of the morning sell-off.
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 gathering strength at today’s close.
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 has an up 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 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 positive and rising indicating higher prices are expected.
Support Levels To Be Aware Of:
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 8 2018
Technical indicators tonight are biased to the positive side of the market.
The Slow Stochastic and MACD are both holding buy signals or up signals that are gathering strength.
Overall there will be dips and possibly even a drop on Thursday down to 2710 but the market is holding a sideways outlook with a bias to close higher on Thursday.
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