Thursday’s market was still stuck in a fairly tight trading range and the 2900 level is supporting the index as we head into Fed Chair Powell’s speech Friday morning. He speaks at 10:00 AM and it won’t take much to move markets, either up or down. Although Friday will be primarily about Powell, looking at the market technically is still worthwhile after Thursday’s close.
Stock Market Outlook Chart Comments At The Close on Thu Aug 22 2019
The index closed at the 21 day MasterCard Stock (MA) on Thursday. The sell signal is still active from Aug 16, but tonight we have an up signal from MACD.
On the chart the closing candlestick is bearish and the Bollinger Bands are continuing to fall.
The 21 day moving average continues to fall and the 50 day is also starting to turn lower. The 100 day moving average is dipping away from the 2900. Only the 200 day moving average is still climbing.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thursday July 18. On Thursday we got an unconfirmed up signal. If the market moves higher on Friday this will confirm the MACD up signal.
- 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 but positive.
- 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 signal has an 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 trending 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 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:
3000 is resistance
2960 is light resistance
2900 is light resistance
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
2675 is light support
2650 is support
2625 is light support
2600 is support.
Stock Market Outlook for Tomorrow – Fri Aug 23 2019
Friday morning we get Fed Chair Powell’s speech which will move markets. A dovish stance with hints of interest rate cuts should keep the market from falling. Any hawkish tones will send the index lower.
Aside from this, the most important signal is the up signal from MACD. The Moving Average Convergence / Divergence technical indicator ha been surprisingly accurate over the past 24 months. Friday might confirm the upsignal.
The technical indicators in general are sitting more sideways than up or down ahead of Friday’s speech.