Stock Market Outlook for Wed Dec 6 2017 – Weakness – Chance Of Bounce Ahead Of Nov Jobs Numbers

Stock Market Outlook More Weakness Bounce still possible


What Happened On Tue Dec 5 2017

Weakness dominated the markets on Tuesday as rumors of some issues with the Tax Reform Bill kept investors away from the buy button. The tech sector continues to be under pressure although many of the tech stocks did stage a bit of a rebound, especially earlier in the morning. Losses were fairly broad-based, but again this isn’t surprising considering that the rally on Monday was narrow and when the market lost Monday’s rally, often we will see a second weak day.

Closing Statistics for Tue Dec 5 2017

S&P 500 Index Close

The S&P index ended down 9.87 to 2629.57

Dow Jones Index Close

The Dow Jones ended down 109.41 to 24180.64

NASDAQ Index Close

The NASDAQ closed down 13.15 to 6762.21

Stock Market Outlook – Review of Dec 5 2017

Stock Market Outlook Dec 5 2017

Chart Comments At The Close:

On Tuesday losses mounted and the S&P closed below the Upper Bollinger Band for a second day. The chance of a test of 2600 is growing as you can see in the technical indicators below.

However losses were still small and all the moving averages are continuing to rise. The closing candlestick at the end of the day was bearish for Wednesday.

Stock Market Outlook: Technical Indicators:

Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive but fell back. It is still strongly positive though.

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 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 signal is positive but is lower again and almost negative.

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 Wednesday.

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 lower again on 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 – Wed Dec 6 2017

For Wed Dec 6 2017 there is a good chance stocks may try to bounce ahead of the Friday release of the jobs numbers. This is just based on historic signals where we often see a move higher the day before the jobs numbers are released. That often means Wednesday we get a sideways to slight move higher and then Thursday a better move up or a bounce. Friday’s numbers are expected to be quite good following poorer numbers for October as a result of the hurricanes.

Aside from that view of a possible bounce, all the other technical signals are weaker but none are point to any kind of large sell-off, just further weakness and a lower close. Therefore we could see a slightly lower close on Wednesday based on the technical indicators but be prepared for a possible pre-jobs numbers bounce Thursday.

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