Volume was unchanged on Wednesday from both Monday and Tuesday. With light volume often comes surprises. After Tuesday’s big rally, many investors felt the markets could now push higher and they still may, but for Wednesday the outlook was lower which is how the day ended.
One the bigger factors on the markets was Lowes Stock which fell over 4% on disappointing quarterly earnings. The drop was so dramatic that it pushed Home Depot lower despite their releasing better than expected earnings less than a week early.
As well, comments from President Trump regarding shutting down the government and ending NAFTA talks also weighed on investors’ minds.
The market gave back some of the gains made on Tuesday and all 3 indexes closed lower on Wednesday.
S&P Index Close
The S&P index ended lower by 8.47 points to 2,444.04.
Dow Jones Index Close
The Dow Jones ended down 87.80 wiping out 40% of Tuesday’s rally. It closed at 21,812.09.
NASDAQ Index Close
The NASDAQ closed down 19.07 to 6,278.41.
Stock Market Outlook
Stock Market Outlook review of Aug 23 2017
Chart Comments At The Close:
The S&P on Wednesday dipped below the 2450 level and spent most the day trading negatively, trying to recover the 2450 level. It never did and it left behind a neutral candlestick for Thursday after closing below the 50 day and 21 day moving averages.
The 21 day moving average is continuing to fall
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is still negative.
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 Aug 3. The sell signal lost 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 is negative 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 is still holding an up signal on the market.
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 back falling.
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 still negative and falling indicating lower prices may lie ahead.
Support Levels To Be Aware Of:
The market had developed light support at 2450 and good support at 2425. There is also light support at 2400, 2380, 2350 and 2300.
Normally we should see the market try to hold the 2425 on Monday.
Stock Market Outlook for Tomorrow – Thursday Aug 24 2017
For Thursday the technical indicators are not as bullish as they were at the close on Tuesday.
However MACD while negative, is seeing the sell signal weakening which is bullish, just not for Thursday. None of the technical indicators made big changes on Wednesday after the market closed. Instead we are seeing weakness continue into Thursday.
I am not expecting a big down day and indeed the market could close positive, but the technical indicators are still hesitant to point positive for Thursday which means we should end the day negative.
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