Friday saw stocks move higher in a broad advance with the highest volume of the year thanks to the final triple witching day of the year.
The S&P duplicated Thursday’s performance and rose almost 16 points to end the day at a new closing high of 3221. Intraday the index reached 3225.
Stock Market Outlook Chart Comments At The Close on Fri Dec 20 2019
The SPX chart continues to be bullish. The closing candlestick on Friday is bullish for Monday.
The Upper Bollinger Band is still rising. The Lower Bollinger Band is moving lower below the 50 day moving average which can be bearish.
All the major moving averages are still climbing and there are three support levels in place. 3100 and 3075 are both light support. 3100 is better support which is 3.2% below where the index closed on Thursday.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive but trending sideways.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Friday Dec 13. On Fri Dec 20, the up signal was stronger.
- 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 signal is moving 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 is overbought and has a weak up signal in place.
- 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 very 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 also rising.
- 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:
3200 is resistance
3100 is light support
3075 is light support
3030 is light support
3000 is support
2960 is light support
2950 was light support
2900 is light support
2860 is light support
2840 is support
2800 is strong support
2795 is light support
2745 to 2750 is light support
2725 is light support
2700 is light support
Stock Market Outlook for Tomorrow – Dec 23 2019
The technical indicators are reading very overbought for much of the market. That does not mean the market cannot continue to be overbought but it is a signal that buyers should be a bit more cautious as we enter the final week of the month. That means setting up trade, taking profits and watching for dips as opportunities to establish new trades. This week should see the Santa Claus Rally later in the week after the Christmas Holiday.
This is a short week with a full day of trading on Monday, a half day on Tuesday which is usually a low volume day, Christmas Day holiday on Wednesday and normally an up day On Dec 26 and Dec 27 which is the start of the Santa Claus Rally period although many investors believe it starts just before Christmas. This week should be an up week for stocks and Monday looks ready for the SPX index to move above 3225.