What Happened On Monday Dec 4 2017
The futures on Monday before markets opened showed a huge jump to start the day following the passage of the GOP Tax Reform Bill in the Senate. Investors began almost immediately to dump technology stocks and move into those stocks they believe will benefit most under lower corporate taxes. This included financial stocks, industrials and retail stocks. As the day progresses though the morning jump was not recovered and the S&P along with the NASDAQ and Dow Jones began to drift lower and then sideways. By mid-afternoon the damage to the tech sector started to worry many investors and a lot of the stocks that in the morning were being bought, were sold and stocks gave back much of their early morning gains. The close saw the Dow Jones still positive but up just 58 points after giving back 250 points from the morning rally which saw the index at 24,534 early in the day.
Closing Statistics for Mon Dec 4 2017
S&P 500 Index Close
The S&P index ended down 2.78 to 2639.44
Dow Jones Index Close
The Dow Jones ended up 58.46 points to 24,290.05
NASDAQ Index Close
The NASDAQ closed down 72.22 to 24,290.05
Stock Market Outlook – Review of Dec 4 2017
Chart Comments At The Close:
On Monday the large morning jump was lost and the S&P closed lower but still on the Upper Bollinger Band. The closing candlestick was decidedly bearish however.
All the major moving averages are still rising but technically Monday’s loss of the rally has set the market up for some weakness.
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and still rose despite the late day drop.
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. The up signal remains strong for Tuesday.
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 but finally turned lower signaling more weakness for Tuesday.
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 a down signal in place for Tuesday.
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 back down on Monday signaling a lower day ahead for Tuesday.
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 but turned lower signaling lower prices for the next couple of days may occur.
Support Levels To Be Aware Of:
The 2600 is building some light support.
There is good support at the 2550 level which could assist in keeping the index up for December.
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 – Tue Dec 5 2017
For Tue Dec 5 2017 stocks could end the day neutral to slightly up or down. The bias shifted with the give back of Monday’s big morning gain to lower for the next couple of days especially with markets continuing to stay overbought.
The rally on Monday morning was narrow with not as many stocks enjoying the rally as there were stocks either moving sideways or moving lower. This made the rally suspect so the drop late in the day is understandable.
Tuesday could see the markets move sideways and keep a slight bias to the downside as investors work through the reaction regarding the Tax Reform Bill and what might come next. This may take a few days to work out so sideways action could dominate the markets for more than just Tuesday.
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