Stock Indexes on Friday Feb 14 2020 had a sideways days but still managed to hold the up bias. The S&P traded within 5 points of its all-time intraday high made just a day earlier, Feb 13. The NASDAQ index was even closer, trading within 2 points of its all-time high of 9748 also made on Thursday (Feb 13).
Friday was the day before the long President’s holiday weekend in the USA and Monday’s Family Day in Ontario. Volumes are normally lower but even with less trading, the indexes spent much of the day holding a continual bias higher. Indeed the S&P closed up 6.22 points for a new closing higher and the NASDAQ was up 19.21 points.
Let’s review Friday’s market action to see what we might expect for Tuesday, when markets open for trading after the holiday weekend.
Stock Market Outlook Chart Comments At The Close on Fri Feb 14 2020
The SPX chart is still bullish. If you recall, the candlestick for Thursday’s close was for a bearish day on Friday. Instead the market managed to hang-on and moved to new highs however the slightly higher close left behind a neutral candlestick on Friday.
We could therefore see some dips on Tuesday, especially if news of the coronavirus infection rate continues to grow.
Technically the chance of a Bollinger Bands Squeeze is gone for now as the market rally ha pushed the Upper Bollinger Band higher and the Lower Bollinger Band is now back below the 50 day moving average. All the major moving average are climbing and the 100 day is now approaching the 3200 support level and the 200 day is approaching the 3100 support level. A move above those support levels will be another indication of further upside for the S&P for the remainder of February and into the start of March.
There are still 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.
The next major dip in the index may try to find support around 3300. If that level was tested and held, it would signal a major move higher is still to come for the S&P.
3350 is no longer resistance for the S&P. Resistance has move to 3400.
Stock Market Outlook review of Feb 14 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and rising sharply on Friday.
- 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 again on Friday signaling more upside is expected.
- 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 back rising.
- 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 an up signal in place for Tuesday and remains very 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 trending sideways and is somewhat 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 moving sideways for a third day, indicating that we shouldn’t expect much change to prices on Tuesday.
- 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
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 – Tue Feb 18 2020
For Tuesday there are two signals of interest. The first are the continued up signals from MACD, the Slow Stochastic and momentum which all point to Tuesday as seeing a higher close.
The second signal of interest is the two sideways indicators from the Relative Strength Index (RSI) and the Rate Of Change. Both are signaling that a sideways day may develop but that investors should not expect a great deal of change to start the third week of February on Tueday.
Overall then, the outlook for Tuesday is probably more dips with some choppy action. However those dips remain opportunities to setup trades as the indexes should end the day higher again on Feb 18.
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