The stock market outlook for Monday was cautionary as it is believed the bounce on Friday is only a bounce and the overall direction is still lower for the SPX. The volume on Monday was the second lowest this year. Stocks stayed flat throughout most of the day.
S&P Index Close
The S&P closed at 2048.04 for a slight loss of only 4.28 points.
Dow Jones Index Close
The Dow Jones closed down just 8.01 points to 17,492.93
NASDAQ Index Close
The NASDAQ closed down just 3.78 points at 4,765.78.
Stock Market Outlook – Advance Decline Numbers
Volume on Monday was just 3 billion shares. Of those shares traded 58% were moving lower by the close and 40% were rising. 48% of all stocks were rising by the close and 49% were falling. New highs were almost unchanged from Friday at 35. New lows fell from 21 on Friday to 12 today.
The NASDAQ traded 1.8 billion shares which is below average. 61% of all volume was moving higher while 36% was moving lower. 51% of all stocks listed on the NASDAQ were rising while 45% were falling. New highs rose to 47 while new lows were unchanged at 36.
Low volume again on Monday points to caution for investors as often low volume will preclude a move lower.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook – May 23 2016
Stock Market Outlook: Chart Comments:
The S&P closed on Monday once again below the 20 day simple moving average and the 50 day moving average. The closing candlestick is bearish for Tuesday.
The 100 day is still above the 200 day moving average which is a longer-term buy signal. The S&P is below the 2050 support level again.
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 is light resistance. Below that is 2050 which is light support and may become resistance shortly.
There is light support at 2025.
Better 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 slightly negative but trying to climb back to positive.
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 sell signal on April 22. The sell signal was weak again on Monday and is continuing in a sideways pattern rather than pushing higher or falling lower.
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 back negative and falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative and sideways which indicates a flat or sideways market.
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 up for stocks for Tuesday
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 I have it set for daily views. The Fast Stochastic is signaling up for stocks for Tuesday but could turn negative with any amount of weakness on Tuesday..
Stock Market Outlook for Tomorrow – Tuesday May 24 2016
Technically the indicators are now 2 positive with two buy signals from the stochastic indicators and 4 negative.
The market direction following today’s low volume trading is showing signs of pulling back once again.
Overall the market continues to look weak and set to pullback and close lower on Tuesday.
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