On Thursday the belief that the Fed will cut interest rates as early as July brought in buyers in a high volume day on the S&P. A new all-time high was set in a broad-based rally marking one of the strongest days for June and for the year.
Of some concern is the continued decline in bond yields which often signals a change in economic outlook and subsequently a change in stock markets. So far however there appears to be a disconnect that is not affecting stocks.
The NASDAQ and Dow Jones Indexes are within easy striking distance of new all-time highs.
The next potential market moving event will be the G20 summit meeting being President Trump and President Xi.
Stock Market Outlook Chart Comments At The Close on Thu Jun 20 2019
The index closed at a new all-time high. The closing candlestick was bullish for Friday but the candlestick has a long tail with often is followed by a down day. However the index is at the Upper Bollinger Band which is bullish even if a down day is next.
The upper Bollinger Band and the Lower Bollinger Band are both moving away from each other. This normally indicates a larger move higher should be expected.
There is still one sell signal in play but the 21 day is still turning higher and should it move above the 50 day, which looks likely for next week, it will negate that sell signal.
Aside from the one sell signal, the chart is very bullish with the major moving averages climbing higher. The 200 day is nearing the 2800 level. A move above it will be bullish for the rally.
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 stronger 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 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 signal has an up signal in place. The technical indicator is showing the market as extremely 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 is extremely 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 turning sideways which indicates we could see shallow prices over the next couple of trading days.
- 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:
2950 is resistance
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 Jun 21 2019
The technical indicators are continuing to gain strength but are now signaling the market is overbought and the advance may slow.
Markets can stay overbought for extended periods of time but dips should be expected.
Friday should see dips in the morning as some profits are taken. Intraday we will see another new high but the close will not be at the high although it will be positive.