Summary:
Monday saw stocks continue to decline in the morning. In the afternoon, comments from Trump administration seemed to offer hope that NAFTA was nearing completion and that trade negotiations were ongoing with China. That buoyed stocks, particularly those that had been beaten down the day before. The close saw all 3 major indexes well off their lows of the day.
Closing Statistics from Tue May 1 2018
The S&P rose 6.75 points to 2654.80 gaining 0.25%
The NASDAQ Composite rose 64.44 points to 7130.70 for a gain of 0.91%
The Dow Jones Industrial Average fell 64.10 points after being down intraday over 300 points. The index closed at 24,099.05 for a loss of 0.27%.
Stock Market Outlook Chart Comments At The Close on Tue May 1 2018
The S&P slipped intraday to 2625 but on low volume. By the close the index was back at the 21 day moving average leaving behind a bullish candlestick for Wednesday. The 50 day moving average is still leading the market, followed by the 100 day and then the 21 day. However the 21 day moving average is starting to turn back up which is a good sign for possibly later in the week. Meanwhile only the 200 day moving average is continuing to rise. The Bollinger Bands Squeeze is also still underway which could potentially send the market up or down.
The close looked slightly more bullish but there are still strong bearish signals coming from the chart.
Stock Market Outlook review of May 1 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative and falling.
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 Apr 11. The buy signal is almost gone by the close 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 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 has changed to a down signal which indicates we could see a couple of down days ahead this week.
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 is also rising.
Support Levels To Be Aware Of:
2745 to 2750 was light support
2710 was light support.
2700 is support.
2675 is light support.
2650 is light support and 2620 is also light support.
2600 is good support.
There is good support at the 2550 level from where the market bounced back from the recent correction 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 – Wed May 2 2018
For Wed May 2 2018 the market has split technical indicators. The Slow Stochastic has turned negative and MACD has only a weak up signal left. Momentum is falling but the Relative Strength Index (RSI), Rate Of Change and Ultimate Oscillator are still rising. The outlook is split from the technical indicators but the chart continues to show a lot of bearishness. That means that while there is still a chance for upside momentum, the outlook is far more mixed. In that kind of environment, downside bias tends to be stronger. That means while there is room for movement to the upside, we could still see further weakness and a lower close. Overall then the outlook is sideways with a bias lower on Wednesday.
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