Stock Indexes on Tuesday were roaring ahead making new intraday highs, until the Federal Trade Commission (FTC) issued orders to large tech companies to provide information on mergers that were too small to report to antitrust regulators. That caused stock like Microsoft to fall taking back most of the rally and ending the day with only slight gains but at new closing highs for the NASDAQ and S&P.
Stock Market Outlook Chart Comments At The Close on Tue Feb 11 2020
The SPX chart is still bullish but the closing candlestick, while bullish, is often a reversal signal for a day of weakness coming up.
The index is continuing to pressure the Upper Bollinger Band to move higher which is bullish.
As well all the major moving averages are continuing to climb higher. There remains some evidence that a potential Bollinger Bands Squeeze might form shortly.
There are four support levels in place. These are light support at 3200, 3100 which is a full 100 points lower, 3075 which is light support and 3000 which is major support.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and 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 Friday Feb 7. The up signal was stronger on Tuesday.
- 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 falling.
- 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 new down signal in place for Wednesday and remains, 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.
- 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:
3350 is resistance
3200 is light support
3100 is light support
3075 is light support
3030 is very light support
3000 is good support and if the S&P fell this low it would mark a normal correction in a bull market
2960 is light support
2900 is light support
2860 is light support
2840 is good support
2800 is strong support
Stock Market Outlook for Tomorrow – Wed Feb 12 2020
On Wednesday we should see indexes try to push higher again although there could be a dip at the outset of trading on Wednesday.
The closing candlestick on Monday is warning of a potential dip either Wednesday or on Thursday.
Any weakness though remains opportunities to setup more trades as the outlook is still higher for the indexes.
On Monday the S&P broke through to 3375 in the morning before falling back. It will recover that high either Wednesday or Thursday of this week.
The outlook for Wed Feb 12 2020 then is a bit of weakness but still higher.