Volumes stayed low on Tuesday but the market entered a broad rally with the indexes enjoying their best one day gains in 4 months.
All sectors rose by the end of the day and the S&P recovered to just above the 2450 technical valuation.
S&P Index Close
The S&P index ended up 24.14 to 2452.51.
Dow Jones Index Close
The Dow Jones ended up 196.14 points to 21,899.89.
NASDAQ Index Close
The NASDAQ closed up 84.35 points to 6,297.48.
Stock Market Outlook
Stock Market Outlook review of Aug 22 2017
Chart Comments At The Close:
The S&P on Tuesday never returned to the 2425 level but instead moved higher and by the close it was above the 2450 level. This placed the index back at the 50 day moving average. The 21 day moving average is still turning lower but that will change if the index can continue to climb.
The closing candlestick on Tuesday is normally bullish for the preceding day.
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is strongly negative but was back climbing on Tuesday.
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 some strength on Tuesday but remains strong.
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 but is rising after Tuesday’s rally.
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 changed to a weak up signal by the close on 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 is rising for a second day.
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 but is rising indicating that prices should rise.
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 – Wed Aug 23 2017
Tuesday saw a very strong bounce. This is the kind of bounce that often see the market dip back for the start of the following day. For Wednesday then, I am expecting weakness in the early morning trading.
The technical indicators are looking a bit better but they remain strongly negative in general. However there is an up signal from the Slow Stochastic and Relative Strength Index (RSI) was rising throughout the day on Tuesday.
Wednesday could see the market try to move sideways. Normally a dip back below the closest support level will occur. That would be the 2450 level which had been support but was broken through last Thursday. That will leave the 2450 level as light resistance so I am expecting a dip below 2450 in the morning. From there the market should try to stabilize but a negative close by the end of the day should be expected. Basically then, I am looking at a sideways day for Wednesday, with a slight bias to the downside.
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