The S&P on Thursday broke through the 3000 level twice in the morning. A mid-afternoon dip down to the 2990 level brought in buyers which sent the index back to within less than a single point of closing at 3000. The close was 2999.91 for a gain of 6.84 points. But there are some changes tonight in the technical indicators that require a review.
Stock Market Outlook Chart Comments At The Close on Thu Jul 11 2019
The index closed below the Upper Bollinger Band again but above all the major moving averages. The closing candlestick was bearish for Friday. This candlestick is often a reversal which means the move up may stall here for a day or even a couple of days. It is or the most accurate candlestick but it is right usually 60% of the time. With the S&P at the 3000 level, investors should be aware of the warning this candlestick is advising.
The Bollinger Bands are both moving higher with the Lower Bollinger Band now above the 100 day moving average. Often this indicates that the next move will be higher for the index. The Middle Bollinger Band or 21 day moving average is climbing higher daily.
The buy signal from June 28 with the 21 day moving above the 50 day, is still gaining strength.
The 200 day moving average is moving higher above the 2800 level which is bullish and the 100 day continues to move up.
The chart is bullish for Friday but caution is advised for Friday following the closing candlestick on Thursday.
Stock Market Outlook review of Thu Jul 11 2019
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and rising.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Thursday June 6. The up signal was weaker again on Thursday. It has weakened each day since July 3 when it when signal was 6.52. It is now down to 3.41.
- 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 moving sideways, unchanged.
- 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 an up signal in place for Friday and is still showing the index as 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 moving higher back into overbought readings.
- 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 unchanged indicating no change in the overall market is expected.
- 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
2950 is light support
2900 is light support
2860 is better support
2830 is light 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.
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.
Stock Market Outlook for Tomorrow – Fri Jul 12 2019
For Friday, investors will try to push stocks higher, in the early start of the day on the back of the testimony of Fed Chair Powell who seemed to indicate that a rate cut was in the works still despite June’s unemployment report. Weakness though is being signaled by the technical indicators so some dips should be expected mid to late morning. The close though should be above 3000. That means dips continue to be traded as the direction remains higher as the rally continues.
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