What Happened On Wed Nov 29 2017
The news on Wednesday was dominated by the drop in NASDAQ which was the biggest one day decline since August. With the NASDAQ index above 6900 on Tuesday, investors decided to take profits in the tech group and move to financials which many feel will are undervalued and will do better in 2018 against a backdrop of rising interest rates. As well a number of retail stocks did well on Wednesday along with some of the airline stocks and communications stocks.
The decline in the tech sector was widespread with Apple, Facebook, Google, Intel, Micron Technology Stock (MU), Advanced Micro Devices Stock (AMD), Texas Instruments, Microsoft, Western Digital Stock (WDC), Seagate Stock (STX) and others falling. Other big stocks collapsing included Amazon.com, Netflix, Alibaba as investors moved their capital into financials. By the close of the day the NASDAQ had lost 1.27%. The Dow though closed at another record high up 100 points and within reach of 24,000. The S&P closed hardly unchanged.
Closing Statistics for Wed Nov 29 2017
S&P 500 Index Close
The S&P index ended down 0.97 to 2626.07
Dow Jones Index Close
The Dow Jones ended up 103.97 to 23,940.68
NASDAQ Index Close
The NASDAQ closed down 87.97 to 6824.39
Stock Market Outlook – Review of Wed Nov 29 2017
Stock Market Outlook review of Wed Nov 29 2017
Chart Comments At The Close:
On Wednesday the S&P made a new intraday high and then dipped lower but by the close it was unchanged. This left behind a neutral candlestick at the close and the index was again above the Upper Bollinger Band.
The Bollinger Bands Squeeze that has dominated the index since the end of October continued to unwind. All the major moving averages are still rising.
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 Nov 28. Today MACD confirmed the 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 and back moving sideways.
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 continues to point to an overbought market with a very weak down signal generated at the close on Wednesday.
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 turned sideways and shows the market as 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 was rising despite stocks selling lower.
Support Levels To Be Aware Of:
The 2600 level is not support yet but dips back to the 2600 level and especially any drops below 2600 are going to be buying opportunities and may therefore be short-lived.
There is good support at the 2550 level which could assist in pushing the index higher in November.
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.
Stock Market Outlook for Tomorrow – Thu Nov 30 2017
For Thu Nov 30 2017 stocks look set for another choppy session and could end the day slightly lower again but the technical indicators hardly budged despite the market gyrations. By the close the technical indicators again point to the market as still holding an up bias. That means once again that any weakness on Thursday is a trading opportunity just as we saw on Wednesday. Remember that selling breeds more selling. When large institutional traders decide to make a move such as we saw today, investors also react and many will sell positions fearing a correction. That makes the market more volatile. Recall that very little fresh capital is being poured into stocks and then consider that the market is still climbing to new highs. To do that, investors are selling positions and buying new ones. Basically they are selling winners and picking those stocks they believe are undervalued and will move higher. This “rotation” is something we have seen a lot of in 2017. With stocks at these levels we are bound to see even more of these types of days but for now, the outlook remains up.
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