Stock Market Outlook for Thu May 17 2018 – An Up Day

Stock Market Summary for May 16 2018 

On Wed May 16 2018 the big news came from the small cap world where the Russell 2000 made a new all-time high. The other big news was the rise of the 10 year Treasury to 3.1%, the highest yield in almost 7 years. Despite the jump in yield, tech stocks and retail stocks did well and helped to keep the indexes positive on Wednesday.

Closing Statistics from Wed May 16 2018 

The S&P rose 11,01 to 2722.46, rising 0.41%

The NASDAQ Composite rose 46.67 to 7398.29 gaining 0.63%

The Dow Jones Industrial Average rose 62.52 to 24,768.93 gaining 0.25%

Stock Market Outlook Chart Comments At The Close on Wed May 16 2018 

The S&P closed for the fifth straight day above all the major moving averages but below the Upper Bollinger Band.

The closing candlestick is bullish for Thursday May 17.

The 21 day moving average is now above the 100 day and at the 50 day. Once it crosses above it, this will be a major up signal for the S&P.

The chart continues to be bullish.

Stock Market Outlook review of May 16 2018

Stock Market Outlook: Technical Indicators Review:

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 an up signal on May 7. The up signal gained more strength 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 positive and 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 signal is down for Thursday and overbought.

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 sideways and nearing 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. 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 signal is falling.

Support Levels To Be Aware Of:

2745 to 2750 was light support

2725 was light support.

2700 is support.

2675 is light support.

2650 is light support

2620 is light support

2600 is strong support.

There is good support at the 2550 level from where the market bounced back from the recent correction low 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 May 17 2018 

With the 2700 level holding on Wednesday, the market should be able to build and move higher.

Technically the indicators are showing some signs of weakness and that’s fine as it assists in setting up more trade opportunities, but overall there is no change in the underlying direction. The indexes are still moving higher.

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