Thursday’s market was dominated by two large dips. Each dip was quickly bought into by investors. This shows there is more upside still to come.
Stock Market Outlook Chart Comments At The Close on Thu Jan 10 2019
The S&P chart is still bearish with 6 sell signals but for a third day the S&P spent the entire day above the 21 day moving average, a good sign for the bulls. Meanwhile the 50 and 100 day moving averages are starting to turn back up which could be an early signal for the bulls.
Note how the Upper Bollinger Band is still falling lower and the Lower Bollinger Band is rising. This could be a new signal to the upside for a few days still before either the index enters a Bollinger Bands Squeeze or the S&P moves back lower.
The closing candlestick on Thursday is bullish but often the following day is flat so be a bit cautious on Friday.
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 Jan 4 2019. That up signal was stronger today.
- 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 rising and signaling overbought.
- 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 an up signal in place. It is also 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 rising and it too is signaling 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 rising.
- 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 Resistance Levels To Be Aware Of:
2900 was support – this will be strong resistance
2860 was support – this will be resistance
2830 was light support and will be light resistance
2800 is strong resistance
2795 is light resistance
2745 to 2750 is light resistance
2725 is light resistance
2700 is resistance
2675 is light resistance
2650 is light resistance
2620 is light resistance
2600 is strong resistance.
There was good support at the 2550 level which is back to being support.
The 2500 level is support.
The S&P has light support at 2480 and better support at 2450.
There is 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 of 641 points as a drop to this level would be 21% and just 5% away from a full bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Fri Jan 11 2019
All the technical indicators are positive but many are now signaling overbought. As well the closing candlestick on Thursday is signaling a potential for a down day to follow it.
The rally off the two dips on Thursday tells us there are buyers taking advantage of the dips. That means there is probably more upside still in the rally.
The general outlook is higher but stay cautious as we see if the closing candlestick on Thursday is followed by some downside action yet again on Friday. Right now the outlook is for some selling, but to end the day higher.
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