Thursday saw investors sell stocks lower in a knee-jerk reaction to the possibility (again) of tariffs being placed on $200 billion of Chinese imports. The close was still above 2900 for the S&P.
Stock Market Outlook Chart Comments At The Close on Thu Aug 30 2018
The S&P closed just below the Upper Bollinger Band on Thursday. It left behind a bearish candlestick for Friday but nothing that would suggest a large fall will occur over the next few days.
All the major moving averages are still climbing which is bullish. The 21 day moving average is also rising. The chart would indicate that at present, there is some weakness for Friday but once finished, the index will move higher.
Stock Market Outlook review of Thu Aug 30 2018
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 Fri Aug 24 2018. The up signal continues to dominate.
- 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 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 and overbought.
- 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:
2830 is light support
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 31 2018
For Friday the chart pattern indicates that weakness has returned to the index but only temporarily.
The technical indicators are primarily pointing lower but there are no signs indicating a large drop is expected or anticipated. Instead it would appear there will be some weakness, especially near the start of the day on Friday.
The close on Friday should be slightly negative as overall the outlook is for the indexes to primarily move sideways on Friday. Friday could be an opportunity to place some trades, especially if the markets move a bit lower.
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