On Thursday stocks opened higher pushing to the highest level since June 23, the day before the Brexit vote. That brought in sellers who took profits and adjusted positions ahead of the June jobs numbers on Friday.
S&P Index Close
The S&P index rallied to 2109.08 in the morning but closed down 1.83 points to 2097.90.
Dow Jones Index Close
The Dow Jones Index reached 17,984.95 just 16 points away from 18,000 before sellers moved in. The Dow ended down 22.74 points to 17,895.88.
NASDAQ Index Close
The NASDAQ once again has the best day among the three indexes. It closed up 17.65 points to 4,876.81.
Stock Market Outlook – Technical Indicators At The Close
Stock Market Outlook -July 7 2016
Stock Market Outlook: Chart Comments:
The S&P ended the day with a bearish candlestick for Friday. As well, the 20 day simple moving average (SMA) is falling and nearing the 50 day moving average. If it falls below the 50 day, it will be a sell signal on the present rally.
All the major moving averages are continuing to move higher which suggests the present weakness will be short-lived.
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 still primary resistance and continues to keep the market advance well in check.
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 but moving sideways.
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 stronger 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 and falling back.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is negative again today and sideways although in general it is more neutral than anything else at present.
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 issued a sell signal at the close today.
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 has an up signal in place for Friday but it is ready to issue a sell signal if the market moves lower on Friday.
Stock Market Outlook for Tomorrow – Jul 8 2016
For the Friday the technical indicators are more mixed than earlier in the week. We now have a new sell signal from the Slow Stochastic. As well the buy signal from MACD is not really advancing but remains poor but still positive.
The rate of change signal is still stuck in neutral which basically means prices are probably not going to change much on Friday.
The unemployment report will be the deciding factor on Friday. If June numbers stun investors as they did in May, the market will fall to 2075. If the numbers are stronger than expect the S&P should jump to 2105 or 2109.
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