Summary:
On Tue Mar 27 2018 we found out that the Monday rally in equities was just a bounce. Tech stocks collapsed in the afternoon sending the NASDAQ tumbling and taking most of the markets with them. The S&P and Dow all closed near the lows of the day.
On Tuesday it looked in the morning that everything was going to be “alright” as stocks climbed and the DOW was up over 200 points. However Technology Stocks were hammered in the afternoon on several fronts. Facebook Stock continued to be under pressure. NVIDIA announced it was suspending driverless car testing for the moment. Twitter came under pressure as rumors circulated that they would be next to undergo scrutiny for how they handle people’s private data and info. Washington buzzed with word that tighter controls would be placed on tech dealings with Chinese companies and suppliers. It was too much for investors to process. The selling commenced mid-afternoon and grew in intensity into the close. It ended up being another ugly day on Wall Street pretty well wiping out the rally from Monday and leaving little doubt that Monday’s rally was over.
Closing Statistics:
The closing price for S&P 500 was $2612.62. The security opened up, and fell 1.73%.
The closing price for NASDAQ Composite was $7008.81. The security opened up, and fell 2.93%.
The closing price for the Dow Jones Industrial Average was $23857.71. The security opened up, and fell 1.43%.
Stock Market Outlook Chart Comments At The Close:
The S&P closed below the 100, 50 and 21 day moving averages again on Tuesday but stayed above the 200 day moving average after touching it during the afternoon sell-off.
The close left behind a bearish candlestick for Wed Mar 28 2018.
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 back down signaling more downside action is expected.
The Lower Bollinger Band is falling away from the 100 day moving average which is bearish.
The Bollinger Bands Squeeze is over.
The 200 day moving average is still climbing which is bullish.
The S&P chart remains bearish.
Stock Market Outlook review of Tue Mar 27 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 Tuesday.
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 falling.
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 an up signal in place for Wednesday.
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 lower.
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 is light support.
2650 is light support and 2620 is also light support.
There is good support at the 2550 level from where the market bounced back from the recent correction.
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 – Wed Mar 28 2018
The technical indicators are back solidly negative except for the Slow Stochastic which is showing the market as deeply oversold and set to turn back up. The other indicators don’t agree and are pointing lower for Wednesday.
Following the sharp sell-off on Wednesday it would be surprising for the indexes to recover. The market action continues to be quite bearish.
Wednesday should see the continuation lower for all 3 indexes.
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