Thursday Dec 5 saw the SPX open higher and then dip back breaking below 3105 but failing to reach 3100. This is a good sign for the index at present. For the remainder of the day the index climbed higher and closed up just 4 points at 3117.
Friday at the open will be all about the November payroll report. Despite this, it is still worthwhile to take a look at the index and the technical indicators for Friday.
Stock Market Outlook Chart Comments At The Close on Thu Dec 5 2019
The SPX chart is still bullish, and on Thursday the index closed above the 21 day moving average again although during the day it fell below it.
At the same time, the rally remains suspect as it has now recovered 23 of the 47 points lost or 49% which is very typical of an oversold bounce.
The closing candlestick is signaling a potential for a reversal on Friday.
The 21 day moving average is back climbing which is bullish but the Bollinger Bands are moving into a Bollinger Bands Squeeze which could be bearish.
Aside from the 21 day moving averages the remaining major moving averages are still climbing including the 50, 100 and 200 day moving averages.
Light support is at 3075 which was tested on Tuesday was not tested on Thursday for a second day. The index is still attempting to climb back back the candlesticks, as you can see, are precariously struggling.
Stock Market Outlook review of Thu Dec 5 2019
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and 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 Mon Dec 2 2019. Today the down signal was stronger.
- 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 sideways for a second day.
- 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 is no longer overbought and has a neutral signal in place but is close to an up signal.
- 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 signaling a bounce is still underway.
- 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 back 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:
3150 is resistance
3075 is light support
3030 is light support
3000 is support
2960 is light support
2950 was light support
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
Stock Market Outlook for Tomorrow – Fri Dec 6 2019
The technical indicators are still mixed heading into Friday and the end of the first week of December. Historically the first two weeks have not been as strong for stocks and the final half of the month and we may be seeing a similar pattern this year as well.
The 3075 support level was not tested for a second day after holding the selling on Tuesday. This is a good sign.
The closing candlestick is pointing to a potential reversal and the Bollinger Bands Squeeze needs to be watched.
We get the November non-farm payroll report on Friday before the open. Often it can be a market moving event. Aside from those numbers however, the technical indicators are pointing more to a sideways pattern with a slightly bias up for Friday.
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