Stock Market Outlook for Feb 19 2020 – Choppy Bias Higher

On Tuesday Feb 18, an earnings warning from Apple on concerns that the coronavirus will affect earnings more than anticipated sent investors to the sidelines. However most investors remember seeing this same “picture” before. Many times warnings from Apple have failed to slow the stock’s advance. The sell-off found ready buyers, especially midday when stock indexes fell to their lowest levels of the day. The close saw the NASDAQ positive and the S&P with a small loss.

Stock Market Outlook Chart Comments At The Close on Tue Feb 18 2020 

The SPX chart is still bullish. The closing candlestick on Tuesday is once again neutral on the outlook for Wednesday.

We could once again see further dips on Wednesday but the outlook is still unchanged for the index.

Technically the chance of a Bollinger Bands Squeeze is gone for now as the market rally has 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 Mon Feb 17 2020

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 weaker 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 down signal in place for Wednesday 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 falling.

• 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.

• 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 – Wed Feb 19 2020 

For Wednesday the signals have shifted with most falling. This points to another day of choppy movement for the index and dips. However the underlying trend remains strong. Wednesday should see the index close positive at another new all-time closing high.

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