Monday saw the NASDAQ close slightly lower but the Dow soared higher and the S&P managed to squeak out another gain.
Stock Market Outlook Chart Comments At The Close on Mon Aug 10 2020
The Upper Bollinger Band continued higher on Friday as the SPX pushed higher again.
The closing candlestick on Monday however often indicates a potential down day is coming shortly.
There are now 6 up signals and one down signal when the Lower Bollinger Band moving above the 100 day moving average back on July 27. At present the Lower Bollinger Band is turning lower which is bullish.
The 21, 50, 100 and 200 day moving averages and continuing to climb.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Monday Aug 3. On Monday the signal was stronger again.
- Settings: For MACD Histogram, I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9.
Ultimate Oscillator: The Ultimate Oscillator is rising and is overbought.
- Settings: 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.
Slow Stochastic: The Slow Stochastic has a neutral signal in place and is extremely overbought.
Settings: 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.
Relative Strength Index: The RSI signal is rising and signaling overbought.
- Settings: 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.
Rate of Change: The rate of change signal is falling.
- Settings: 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.
Support and Resistance Levels To Be Aware Of:
3375 is resistance
3300 is resistance
3275 is support
3200 is support
3150 is support
3050 is support
3000 is support
2975 is light support
2950 is light support
2900 is light support
2860 is light support
2840 is light support
2800 is good support
2725 is light support
2700 is light support and marked a drop of 20.4%.
2500 was good support and marked a correction of 26.3%
2191 was the market low on March 23
Stock Market Outlook for Tomorrow – Tue Aug 11 2020
For Tuesday markets are once again very overbought. Investors are taking profits in many stocks that have made exceptional gains over the past several months to several weeks. This is creating some weakness but dips in individual stocks are being snapped up.
For Tuesday the overbought condition will play a role in keeping a bit of a lid on the rally but indexes still look ready to continue to move higher.