The Stock Market Outlook for Tuesday was for the market to close slightly lower. Markets actually did well considering the attacks in Brussels and the degree of concern it caused.
S&P Index Close
Tuesday started with the market outlook collapsing following the terrorist attacks in Brussels. The decline lasted for the first half hour and then buyers returned and sent stocks higher. By the late afternoon stocks were trading above 2050 at the 2056 level. The last hour saw selling return and the SPX fell lower to close down 1.80 points to 2049.80, just below the 2050 value.
Dow Jones Index Close
The Dow Jones closed lower with a decline of 41.30 points to 17,582.57.
NASDAQ Index Close
The NASDAQ moved higher on the day, closing up 12.79 points to 4,821.66.
Stock Market Outlook – Advance Decline Numbers
Volume was pretty well unchanged on Tuesday at 3.4 billion shares. 41% of all volume was to the upside and 57% was to the downside by the close. 45% of all stocks were advancing and 51% declining with 3% unchanged.
New highs rose slightly to 70 while new lows were just 9.
While the advance decline numbers show the market is under increasing pressure and buyers are holding back their capital, the number of new highs continues to suggest that stocks will break through 2050 and move higher shortly.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Mar 22 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 200 day moving average again on Tuesday and just below the 2050 level. Today marked the third attempt to break the 2050 barrier. The closing candlestick on Tuesday was bearish for Wednesday.
The Upper Bollinger Band is still rising although it is starting to turn sideways.
The 20 day simple moving average (SMA) is rising higher above the 100 day and could cross up and over the 200 day if the market can grind a bit higher. This will be another buy signal for the S&P.
The 50 day simple moving average (SMA) is continuing to turn back up as well.
The Lower Bollinger Band is moving higher and will shortly cross over and above the 50 day moving average which will be another bullish signal for the index.
The 200 day is still leading the market followed by the 100 day. This remains bearish.
Stock Market Outlook: Support and Resistance Levels:
These are the present support and resistance levels. These levels have not changed since January 2015.
2100 is resistance.
2075 was light support and is now resistance. Below that is 2050 which is resistance.
Light support is at 2000.
Weak support is at 1970 while stronger support is at 1956 and technically it is more important than 1970 for the market. 1940 is light support as is 1920. 1900 is more symbolic than anything else.
1870 is support. 1840 continues to be support. The 1820 level is light support. The strongest support level is at 1800.
1775 and 1750 are both critical support for the present bull market. While 1775 is important it is 1750 that is the bottom line.
A break of 1750 would mark a severe correction from the all-time high of 2134.72. This would be the biggest correction since the plunge in 2011 of a 20% pullback. A pullback to 1750 from the all-time high would be a drop of 384 points for a decline of 18%. A pull-back of that size would definitely stun investors and bring to question whether the bull market which started in 2009 is finished. From 1750 it is an easy slide to 1600 which was near the market top in 2007.
Stock Market Outlook Technical Signals
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and starting to climb which I indicated yesterday momentum needed to do to keep this rally from pulling back.
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 Feb 16 which was weaker yet again 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 is positive, overbought and unchanged.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and lower with a reading of 5.36. This is till a high reading but does indicate that stock prices are starting to fall.
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 is neutral to down for stocks and is extremely overbought.
Fast Stochastic: For the Fast Stochastic I use the K period of 20 and D period of 5. These are not default settings but settings I set for the 1 to 3 month S&P 500 chart when it is set for daily. The Fast Stochastic is signaling down for stocks and is extremely overbought.
Stock Market Outlook for Tomorrow – Wednesday Mar 23 2016
Only 1 of the technical indicators has a buy signal in place. The other 5 technical indicators are positive but showing weaker signals. The Ultimate Oscillator is still overbought and has been that way since March 14. This is a good sign for the market as overbought markets tend to push higher. If the Ultimate Oscillator starts to pullback, we could see the index fall.
The earnings from Nike were below expectations and many analysts will point to those numbers as proof that the global communities are moving toward recessions. Whether there is truth to this or not, the fact they failed to meet expectations should place additional pressure on stocks.
The outlook for Wednesday is for stocks to remain overbought buy move lower. I am not expecting a big drop, but a move down to better support which could be as low as 2025 or 2030. On Wednesday I am not expecting the pullback to be anything more than slight. A move lower, to 2030 or 2025 could take place on Thursday or the start of next week.
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