What Happened On Tue Dec 19 2017
Tuesday saw all 3 indexes move back from the all-time highs set on Monday. Investors waited for the passage of the new Tax Reform Bill and many stayed on the sidelines. Overall losses were small on Tuesday.
Closing Statistics for Tue Dec 19 2017
S&P 500 Index Close
The S&P index ended down 8.69 to 2681.47
Dow Jones Index Close
The Dow Jones ended down 37.45 to 24,754.75
NASDAQ Index Close
The NASDAQ closed down 30.91 to 6963.85
Stock Market Outlook – Review of Tue Dec 19 2017
Chart Comments At The Close:
On Tuesday the S&P moved sideways which left behind a bearish candlestick at the close of trading. Losses were small and little changed on Tuesday. The index is still just below the Upper Bollinger Band which is bullish and all major moving averages are still climbing higher.
Stock Market Outlook review of Tue Dec 19 2017
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive but moving sideways.
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 was slightly weaker on 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 slightly negative and moving 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 has an up signal in place for Wednesday and is overbought.
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 down but is still 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 positive stayed sideways on Tuesday which indicates prices are expected to not see much change before heading higher shortly.
Support Levels To Be Aware Of:
The 2600 is 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 – Wed Dec 20 2017
For Wednesday we could see a sharp bounce at the open with the passage of the Tax Reform Bill, however we then have to be aware of the overbought market and the chance investors may take profits now that the “news” of the tax bill is “over”. Investors may wonder what next piece of news will be able to push the markets higher. The FedEx Stock earnings on Tuesday after the close may be an indicator of what investors may see as the company reported the possibility that earnings in 2018 may rise much more than expected if the tax rates in the new tax bill take effect. This is one of the primary reasons investors have been buying stocks as they expect corporations will have better earnings under the new taxes. If that is the case, stocks may have more upside ahead in 2018.
Overall I am expecting a bounce at the open and then some selling and perhaps a sideways move. I am expecting a slightly positive close on Wednesday.
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