Thanks to China the outlook switched on Thursday from down to up. The decision to not implement further tariffs by China is a good sign that a resolution could be in the works for the ongoing trade war. The news sent stocks soaring on Thursday and we should see that move continue Friday. Here are the technical indicators from Thursday’s close.
Stock Market Outlook Chart Comments At The Close on Thu Aug 29 2019
The potential of a Bollinger Bands Squeeze continued to develop on Thursday which is evident in the chart below. At present it would now appear that the Bollinger Bands Squeeze may end with stock moving higher.
The 21 day moving average is below 2900 the 100 day which is a second down signal from the moving averages.
The closing candlestick is bullish for Friday.
The 50 day moving average is still falling while the 100 day moving average which has been moving primarily sideways, is falling below the 2900 valuation. The 200 day moving average is still climbing.
The S&P chart still looks bearish for Friday, but the candlestick from Thursday is finally back above the 100 day moving average. This is a great sign but for the move up to hold, the index must break above 2950 and 2960. At present, 2960 is light resistance.
Stock Market Outlook review of Thu Aug 29 2019
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and back positive.
- 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 Thurs Aug 29 an unconfirmed up signal was generated. I am expecting this will be confirmed 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 positive and 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 signal has a strong 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 rising.
- 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 rising indicating higher prices for stocks lie ahead.
- 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 support
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 30 2019
Stocks are emotional investments for most investors and today showed again what emotions can do. Late last week a sell-off sent the index to just below the 200 day moving average as investors panicked and sold out of stocks. Today investors were back buying stocks and sending the S&P back to levels last seen Aug 22. Investing has always been more about emotions and the month of August has certainly been an emotional one.
Tomorrow is the final day of the month. Historically it has been a down day for the indexes but this year, the outlook is up for stocks. The S&P could try to reach 2950 on Friday. If it fails, it will reach it early next week after the long holiday weekend.
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