Thursday started with the markets already weak following higher than expected Weekly Initial Unemployment Insurance Claims coming in at 1.1 million. This was above the expected 923,000. For a lot of investors, this meant that the recovery is stalled and that sent stocks lower at the open. This didn’t last however as the dip buyers took advantage and the day was spent pushing the index higher. By the close all 3 indexes were positive and the S&P closed at 3385.
Stock Market Outlook Chart Comments At The Close on Thu Aug 20 2020
On Thursday the closing candlestick is bullish for Friday. This is the first bullish candlestick in 5 trading sessions.
Note that while the Upper Bollinger Band continues to rise, the Lower Bollinger Band could easily cross above the 50 day which would give investors a down signal. A question was posed on twitter regarding the Lower Bollinger Band should it cross above the 50 day. Such a move by the Lower Bollinger Band is considered bearish for two reasons. The first is because the Lower Bollinger Band already crossed above the 100 and has not fallen below it. A move above would be a second signal of weakness. The second is because the 50 day should be moving higher and a move above the 50 day by the Lower Bollinger Band indicates weakness in the uptrend and is a cautionary signal.
There are still 6 up signals and one down signal caused when the Lower Bollinger Band moving above the 100 day moving average back on July 27. At present the Lower Bollinger Band is still trending just below the 50 day moving average and as explained above, it could easily move above the 50 day giving us a new bearish signal.
The 21, 50, 100 and 200 day moving averages are continuing to climb. The SPX chart is still more bullish than bearish but a number of the technical indicators are continuing to turn bearish.
Stock Market Outlook review of Thu Aug 20 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling but still positive.
- 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 Thu Aug 20 2020 the day ended with an unconfirmed sell signal.
- 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 trending sideways.
- 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 weak down signal in place and is still 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.
- 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 which indicates little change in prices is expected.
- 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:
3400 is resistance
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 – Fri Aug 21 2020
For Friday the chart is still a bit bearish but the technical indicators are definitely showing signs of weakness. Both the MACD and Slow Stochastic have down signals in place to start the day. On the other side stands the dip buyers who continue to use drops, even small ones, to trade stocks especially those that have dropped.
With technical indicators pointing lower, Friday could end lower but remember that a lot of investors are using the dips to jump into positions and we should see that happen again on Friday.
The outlook then is for a choppy day with dips and a potential negative close. It’s not the start of a more negative move, but just a bit of weakness while the market continues to digest the new highs and investors decide where the market will move next.
Stock Market Outlook Archives
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Morning Investing Strategy Notes for Tue May 5 2026
Stock Market Outlook For Tue May 5 2026 – Overbought and Lower
Morning Investing Strategy Notes for Mon May 4 2026
Stock Market Outlook For Mon May 4 2026 – Dips Likely With Possible Lower Close
Morning Investing Strategy Notes for Fri May 1 2026
Stock Market Outlook For Fri May 1 2026 – Overbought But Higher
Morning Investing Strategy Notes for Thu Apr 30 2026
Stock Market Outlook For Thu Apr 30 2026 – Dips Likely Possible Lower Close
Morning Investing Strategy Notes for Wed Apr 29 2026
Stock Market Outlook For Wed Apr 29 2026 – Choppy But Higher Ahead Of More Earnings
Morning Investing Strategy Notes for Tue Apr 28 2026
