The Stock Market Outlook for Monday was for stocks to experience some trouble as they are overbought, but in general continue to push higher. Instead investors were troubled by the decline in oil prices. As well, with the Fed’s interest rate decision on Wednesday, a lot of investors decided to sit the day out.
I was busy on and off throughout the day on Monday with a few trades, but most of my time was spent preparing for the update to the website. Unfortunately I did not get a chance to post any articles while the market was open. This week will see changes to the FullyInformed.com website. many of which we were testing today.
S&P Index Close
The S&P index moved lower throughout the day but closed well off the lows at 2168.48 down 6.55 points.
Dow Jones Index Close
The Dow followed the S&P lower but it closed well off the lows falling 77.79 points. The close was just below 18,500 at 18,493.06. The loss for the day was not quite half a percent.
NASDAQ Index Close
The NASDAQ closed with just a small dip of 2.53 points. The close was at 5,097.63.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook for July 25 2016
Stock Market Outlook: Chart Comments:
The S&P has now been trending sideways for 7 days. Twice it has tried to push higher but failed. The closing candlestick at the close today was bearish for stocks.
The 20 day simple moving average (SMA) is continuing to rise as are the other major moving averages which indicates this is still an uptrending market.
Stock Market Outlook: Support and Resistance Levels:
These are the present support and resistance levels.
The S&P is trying to build support around the 2160 level.
2100 has become light support.
2090 is very light support.
2075 is also light support
Below that is 2050 which is light support.
2025 is better support than 2050 through to 2090.
2000 is primary support.
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 on July 1. The buy signal was weaker again on Monday.
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 and very overbought.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and moving lower.
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 extremely overbought and has a neutral signal in place 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 extremely overbought and has a down signal in place for Tuesday.
Stock Market Outlook for Tomorrow – July 26 2016
For Tuesday the outlook is for the market to move more sideways than up or down, ahead of the Fed meeting and announcement on Wednesday.
The weakness the market is experiencing is just a slight pullback at this point in the rally. Investors though, are sitting on their hands waiting for confirmation that the Fed plans to do nothing with interest rates on Wednesday,
The technical indicators are still pointing to Tuesday being choppy, with a slight bias to the downside.
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