Stock Market Outlook for Feb 20 2020 – Weakness But Higher Close Expected

On Wed Feb 19 2020 the S&P and NASDAQ made more new all-time highs both intraday and closing highs. However while trading volumes were still good a lot of that volume was being placed in the same stocks, primarily the leaders and that is shown tonight in the technical indicators below. Let’s take a look.

Stock Market Outlook Chart Comments At The Close on Wed Feb 19 2020 

The SPX chart is still bullish but you can see how the candlesticks over the past 5 trading days are moving more sideways than actually a lot higher. The closing candlestick yesterday was neutral on the direction while the candlestick today points to a weaker day on Thursday.

All the major moving average are climbing and the 100 day is continuing to approach the 3200 support level and the 200 day is still moving to 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 Wed Feb 19 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is positive but falling for a second day indicating growing weakness.

• 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 again on Wednesday which is pointing to further weakness tomorrow.

• 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 has a down signal in place for Thursday 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 moving sideways.

• 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 moving sideways.

• 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 – Thu Feb 20 2020 

For Thursday there are no up signals aside from a declining MACD signal.

All the signals are weakening. Many of the signals are now pointing sideways which reflects what we are seeing in the SPX chart over the past 5 trading days.

Thursday looks set to see more weakness appear which means more dips but the underlying strength is still for a higher close.

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