Summary:
The outlook for Monday Apr 2 was for stocks to move lower in the morning, taking a dip as it were, after Thursday’s run-up. Then stocks were expected to move back up and close positive. Tuesday was the day stocks were expected to fall lower.
Instead stocks were pummeled yet again and the S&P finally broke through the 2600 level.
Closing Statistics:
On April 2nd (2018) the closing price for S&P 500 was $2581.88. The security opened down, lost 58.99, and fell 2.23%.
The closing price for NASDAQ Composite was $6870.12. The security opened down, lost 193.33, and fell 2.74%.
The closing price for Dow Jones Industrial Average was $23644.19. The security opened down, lost 458.92 and fell 1.90%.
Stock Market Outlook Chart Comments At The Close:
The chart overall remains bearish.
The S&P closed below sell the major moving averages including the 200 day, on Monday. This is the first time it has closed below the 200 day since 2015. This is definitely bearish.
The close left behind a bearish candlestick for the next trading days.
The 50 day moving average is falling as is the 100 day moving average. Both of these signals are bearish.
The 21 day moving average is turning lower signaling more downside action is expected as it falls below 2700.
The Lower Bollinger Band is falling away from the 200 day moving average which is bearish.
The 200 day moving average is still climbing which is bullish.
The S&P chart remains bearish.
Stock Market Outlook review of Mon Apr 2 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative 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 sell signal on March 20. That sell signal was strong again on Monday but oversold.
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 signal is negative and rising.
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 has a down signal in place for Tuesday and it is signaling somewhat oversold.
Relative Strength Index: The relative strength index is set for a period of 5 which gives it 5 days of market movement to monitor. It is often the first indicator to show an overbought or oversold signal. The RSI signal is falling.
Rate of Change: Rate Of Change is set for a 21 period. This indicator looks back 21 days and compares price action from the past to the present. With the Rate Of Change, prices are rising when signals are positive. Conversely, prices are falling when signals are negative. As an advance rises the Rate Of Change signal should also rise higher, otherwise the rally is suspect. A decline should see the Rate Of Change fall into negative signals. The more negative the signals the stronger the decline. The rate of change is negative and falling.
Support Levels To Be Aware Of:
2745 to 2750 was light support
2710 was light support.
2700 was good support.
2675 was light support.
2650 was light support and 2620 was also light support.
2600 was good support which broke on Mon Apr 2 2018.
There is good support at the 2550 level from where the market bounced back from the recent correction on Feb 9.
The S&P has light support at 2480. It also has light support at 2450 and good support at 2425. Below that there is some support at 2400, 2380, 2350. 2300 has the most support at present but would represent a full correction as a drop to this level would be 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Tue Apr 3 2018
The technical indicators are negative. Even those that were rising on Thursday last week are back falling.
The chart is bearish and all signals are bearish.
Tuesday should see the market try a rebound but quickly fail. I won’t be surprised if the market opens slightly higher and immediately stages a rally which within 20 minutes will fail. Tuesday will end with the index lower. A break of 2550 seems likely.
The S&P close on Monday below the 200 day moving average is significant. This is the first time since 2015 that the index has closed below the 200 day moving average. Normally this type of break sets the S&P up for a deeper correction.
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