Thursday saw stocks under pressure in the morning but once again the early morning dip which reached 3025, brought in buyers. The S&P stayed sideways from 10:30 until 2:40 but then with sellers show little interest in continuing to dump shares stocks shook off the sideways pattern and shot higher for a spectacular rally into the close. The S&P ended the day at 3083.76.
Stock Market Outlook Chart Comments At The Close on Thu Jun 25 2020
The index closed below the 21 day moving average, but left behind a bullish candlestick for Friday.
The Upper Bollinger Band is moving lower and the Lower Bollinger Band is moving higher once again and is above the 200, 100 and 50 day moving averages. This is setting the index up for another Bollinger Bands Squeeze by the start of next week.
There are now 5 up signals in place as the 50 day has pushed above the 100 and 200 day moving averages.
Overall the index is more bullish than bearish although the close of the index on Thursday at the high of the day is often followed by an early morning dip before the index can push back higher.
Stock Market Outlook review of Thu Jun 25 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and back 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 Friday June 12. The down signal was strong 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 and negative.
- 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 a down signal in place.
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.
- 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 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 resistance
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 Jun 26 2020
The technical indicators are mixed following Thursday’s dramatic end of day bounce. The market closing at the highs of the day is normally a signal that the following day we will see the index open weaker before rallying again.
Meanwhile news about the Fed putting restrictions on bank dividends and share buy backs may lead to weakness on Friday at the start as bank stocks fell back after hours on Thursday on the Fed news.
With the technical indicators split, we should see a morning dip or lower open on Friday but then a rally to close higher for the week as the bias is up.
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