On Wednesday new highs were again made but the market showed definite signs of the rallying slowing down. The overbought nature of the market combined with many stocks at all-time highs is bringing out sellers.
S&P 500 Index Close
The S&P index ended up 3.16 to 2537.74
Dow Jones Index Close
The Dow Jones ended up 19.971 to 22,661.64
NASDAQ Index Close
The NASDAQ closed up 2.91 to 6534.63
Stock Market Outlook
Stock Market Outlook review of Oct 4 2017
Chart Comments At The Close:
The S&P on Wednesday closed at the Upper Bollinger Band for a third straight day marking the continuation of what has been a strong rally. The closing candlestick is still bullish but is also signaling the chance of a negative day for Thursday.
The 21 day is continuing to climb. The 50 day is also trying to move higher which is bullish for the rally.
The 100 and 200 day moving averages are continuing to rise which is bullish.
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 Aug 31. The buy signal was stronger again 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 positive, overbought and turning 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 is extremely overbought. It issued a down signal at the close on Wednesday. It can take more than a day for the signal to come through but it is the first down signal from the Slow Stochastic since Sep 15.
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 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 back climbing and signaling higher prices are ahead.
Support Levels To Be Aware Of:
The S&P has light support at 2480. It has light support at 2450 and good support at 2425. There is also light support at 2400, 2380, 2350 and 2300.
Stock Market Outlook for Tomorrow – Thursday Oct 5 2017
There are two warnings signals for Thursday. The closing candlestick is slightly bearish and the Slow Stochastic issued a down signal. It can often take more than a day for the index to reflect the chance in trend from the Slow Stochastic however we could see the overbought markets begin to stall.
Overall we should see a slowing of the rally and a possible negative close on Thursday or Friday, if Thursday is positive.
Investors also get the non-farm payroll numbers on Friday. we could see the S&P sit sideways for much of the morning and dip a number of times but then the afternoon is almost a coin toss. Often the S&P surprises with a move higher at the end of the day prior to Friday’s jobs numbers.
The outlook then is for this overbought market to begin to slow and the possibility of a slightly negative close is higher for Thursday than any other time this week.
Stay FullyInformed With Email Updates
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)
Market Direction External Links
IWM ETF Russell 2000 Fund Info
Market Direction SPY ETF 500 Fund Info