Stock Market Outlook for Aug 24 2020 – Sideways, With A Bias Lower

Friday started off with the index slipping to just below 3380 but that brought in buyers. It also marked the low of the day as the remainder of the day saw investors push the index higher to a new intraday high of 3399.96.

Investors who emailed in this past weekend saw various changed occurring on the website. I spent the weekend from Friday night through to Sunday night with the developers as a new website is being prepared which will accommodate the next set of investing tools. For that reason the articles tonight are short. I will be trading tomorrow and will post trades as I enter them.

Stock Market Outlook Chart Comments At The Close on Fri Aug 21 2020 

On Friday the closing candlestick is bullish for Monday. This is the second bullish candlestick in 6 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.

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 bearish as you will see below.

Stock Market Outlook review of Aug 21 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is trending sideways.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thursday Aug 20. That signal was stronger at the close of trading on Friday.

• 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 rising which indicates changes in pricing should be 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 – Mon Aug 24 2020 

For Monday the index is mixed but there is still more bullishness than bearishness. Even those indicators that are signaling down, like MACD and Slow Stochastic are still not overly bearish.

This should lead to the index breaking 3400 on Monday and closing just above it for the first time. Dips though are likely but, as we have previously seen, the dips are opportunities to setup trades.

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