Summary:
On Mon May 7 2018 stocks pushed higher with the S&P moving above the 2680 level in the morning. From there the index struggled to break higher but kept running into sellers who have waited for the index to rise this high.
Oil prices rose for the fourth straight trading day and are now at levels last seen in 2014. Apple stock rose for a sixth straight day. The indexes gave back much of the rally after 2:00 PM but into the close buyers again showed up and the indexes closed well off their highs, but also well off their lows.
Closing Statistics from Mon May 7 2018
The S&P rose 9.21 to 2672.63 adding 0.35%.
The NASDAQ Composite rose 55.60 to 7265.21 adding 0.77%.
The Dow Jones Industrial Average rose 94.81 closing at 24,357.32 for a gain of 0.39%.
Stock Market Outlook Chart Comments At The Close on Mon May 7 2018
The S&P pushed higher on Monday clear the 21 day moving average, the 100 day moving average and bumped up against the 50 day moving average. It was at the 50 day where sellers kept dumping shares which kept the index from climbing higher.
The index closed above the 21 day moving average, at the 100 day but was still below the 50 day moving average. The candlestick at the close is often a signal that the index could reverse directions starting on Tuesday.
The 200 day moving average is still climbing while the 50 and 100 are still falling. The 21 day is moving higher and could cross over the 100 day and the 50 day moving averages, shortly which would be an up signal for the markets.
Stock Market Outlook review of Mon May 7 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 a down signal on May 2. On Monday the SPX issued an up signal which has to be confirmed this week.
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 rising.
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 up 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 is often the first indicator to show an overbought or oversold signal. The RSI signal is rising.
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 rising.
Support Levels To Be Aware Of:
2745 to 2750 was light support
2710 was light support.
2700 was support.
2675 was light support.
2650 was light support
2620 is light support
2600 is good 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 – Tue May 8 2018
For Tue May 8 2018 the indexes look set to push higher by the close of trading. Despite being somewhat overbought, the signals are showing strength in all the indicators.
There will be some weakness on Tuesday but overall the outlook remains higher.
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