Thursday was another low volume day with the indexes ending the day lower. Investors were focused on a variety of issues including further updates to the Cohen plea deal, more tariffs between China and USA, falling commodity prices and nervousness ahead of Fed Chair Powell’s speech at Jackson Hole on Friday.
Stock Market Outlook Chart Comments At The Close on Thu Aug 23 2018
Again the day was almost unchanged on Thursday with the S&P index slipping just slightly. The intraday movements of the index left behind another bearish candlestick although this one is normally seen as a reversal, meaning that following days are higher.
All the major moving averages are still climbing and the Bollinger Bands Squeeze is turning higher and is above the 50 day moving average which is bullish. The 21 day moving average is also turning higher. The chart would indicate that at present, any weakness won’t last and the S&P will push higher once this weakness is out of the way.
Stock Market Outlook review of Thu Aug 23 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and unchanged as it moves sideways.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Mon Aug 13 2018. The down signal was weak on Thursday and a strong up day could turn the down signal to an up signal if one were to occur.
- 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 positive and falling and almost ready to turn negative.
- 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 and is 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 Levels To Be Aware Of:
2795 is light support
2745 to 2750 is light support
2725 is light support.
2700 is support.
2675 is light support.
2650 is light support
2620 is light support
2600 is strong support.
There is good support at the 2550 level from where the market bounced back from the recent correction low on Feb 9.
The S&P has light support at 2480. It also has light support at 2450 and good support at 2425. Below that there is some support at 2400, 2380, 2350. 2300 has the most support at present but would represent a full correction as a drop to this level would be 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Fri Aug 24 2018
For Friday the chart pattern indicates that the market will continue lower, however the closing candlestick which is bearish, is often a reversal candlestick and stocks will move higher.
Overall the outlook is for weakness to continue, but the close will be positive on Friday.
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