The Stock Market Outlook for Wednesday was for the markets to move lower. There are a number of issues weighing on investors. Everything from the Brussels attacks to a bit of Fed infighting on a possible April rate hike to housing stats that show a possible slowdown to oil that dipped 4% to close at $39.79.
S&P Index Close
The S&P has been trying to push past the 2050 level without much success. With momentum volume and volume declining, the S&P pulled back to close down 13.09 points for a modest 0.64% loss. It closed at 2036.71.
Dow Jones Index Close
The Dow Jones held on a bit better than the SPX and closed down just off the lows of the day at 17,502.59 down just 79.98 points for a 0.45% loss.
NASDAQ Index Close
The NASDAQ had the worst day, falling 1.10% to lose 52.80 points and close down at 4,768.86
Stock Market Outlook – Advance Decline Numbers
Volume was moved up by about 200 million shares on Wednesday but almost a billion of those shares were traded in the last hour. Total volume was 3.6 billion. By the end of the day 85% of all volume on New York was moving lower. 72% of all stocks were also falling.
At the close there were 63 new 52 week highs and 12 new 52 week lows. The advance decline numbers point to Wednesday as being a case of profit-taking following three failed attempts to push beyond 2050.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for Mar 23 2016
Stock Market Outlook: Chart Comments:
The S&P closed above the 200 day moving average again on Wednesday but fell away from the 2050 level. The closing candlestick on Wednesday is not overly bearish for Thursday.
The Upper Bollinger Band is turning lower but is still overbought and positive.
The 20 day simple moving average (SMA) is rising higher and is nearing the 200 day exponential moving average (EMA).
The 50 day simple moving average (SMA) is continuing to turn back up.
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. While this remains bearish, the 100 day moving average is turning higher today.
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 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 Feb 16 which now has a reading of just 3.00. It could issue a sell signal shortly if the market moves lower on Thursday.
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 moving lower.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and rising with a reading of 6.01. This is still a high reading and it indicates that prices are changing fairly rapidly.
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 signaling 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 – Thursday Mar 24 2016
For Thursday the market will open with 2 sell signals in place and weakness showing in the remaining 4 technical indicators. The market close at 2036 is not all that bearish however and we could see markets try to move back to the 2045 level on Friday. That won’t hold going into the long weekend.
I am expecting low volume on Thursday and many investors taking a wait and see approach as the long weekend starts. That means a sideways kind of day for Thursday with a bias slightly lower, perhaps to 2030 but a close almost where the market closed today, would not be unexpected.
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