Stock Market Outlook for Fri Jul 17 2020 – Choppy, Dips Likely But Higher

Thu Jul 16 2020 saw stocks test the 3200 level and eventually they closed above it which could set up Friday for another attempt to push still higher. Let’s review Thursday’s close to see what it might tell us about Friday.

Stock Market Outlook Chart Comments At The Close on Thu Jul 16 2020 

The index closed above the 21 day moving average again on Thursday and at the Upper Bollinger Band. The closing candlestick is again neutral for Friday.

You can see the Upper Bollinger Band is starting to move higher as is the 21 day moving average. The Lower Bollinger Band is starting to move lower which could signal the end of the Bollinger Bands Squeeze.

There are now 6 up signals and no down signals in the chart.

The 50 day moving average is climbing still further, which is readily seen in the chart. The 100 day is also climbing further above the 200 day.

The index is back to the standard form of the 21, 50, 100 and 200 day format which is typical of a bull market.  The index closed above 3200 again on Thursday and looks set to try to push higher for Friday.

Stock Market Outlook review of Thu Jul 16 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is 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 Wednesday July 8. That up signal was stronger again on Thursday.

• 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 is 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 an up signal in place and is very 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.

• 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 also 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 and Resistance Levels To Be Aware Of:

3200 is resistance

3150 is support

3050 is support

3000 is support

2975 is light support

2950 is light support

2900 is light support

2860 is light support

2840 is light support

2800 is good support

2725 is light support

2700 is light support and marked a drop of 20.4%.

2675 is light resistant

2650 is light support

2625 is light support

2600 is support

2550 is light support

2500 was good support and marked a correction of 26.3%

2344 is the next level of support and marks a 30.9% correction.

2191 was the market low on March 23

2100 is light support

2000 is good support and marks a drop of 1393 points for a 41% correction. Some analysts still believe the index will fall this low in the second half of 2020.

 Stock Market Outlook for Tomorrow – Fri Jul 17 2020 

For Friday stocks look set to try to push higher away from the 3200 level. On Thursday the 3200 level was tested repeatedly and failed to break. This adds strength to the bulls outlook for a higher close on Friday and next week.

The technical indicators are more mixed after Thursday’s close with 3 of the indicators falling. Despite this, the index still looks set to try to close higher on Friday.  Watch for a choppy session with dips quite likely, but a higher close by the end of trading.

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