Thursday saw the indexes open lower and fall lower. The S&P fell below 2840 and after trading below 2840 for two hours in the morning, the index began to climb.
The rally continued into and through the lunch hour reaching 2873 on good volume.
A dip after 3:00 took the S&P down to 2860 but large volume returned and the index moved higher closing at 2870 on good volume.
Stock Market Outlook Chart Comments At The Close on Thu May 9 2019
The drop on Thursday morning took the Sep below the 50 day moving average. It closed however back at the 50 day moving average.
The closing candlestick is bearish but often this type of candlestick, with a long tail, signals a bounce is at hand.
The Lower Bollinger Band turned lower on Thursday, also a signal of an impending bounce.
The 21 day moving average is falling but not the 50, 100 or 200 day.
The chart is bearish but also shows quite a few signals pointing to a bounce coming as soon as Friday.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is negative and still falling.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Wednesday May 1. On Thursday the down signal was stronger again.
- 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 it is turning back up signaling a bounce is at hand.
- 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 strong down signal in place and is at numbers that usually precede a bounce.
- 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 and is oversold. It is reaching levels where shortly a bounce should be expected.
- 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 and is at levels where it is oversold and a bounce is being signaled for Friday.
- 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 light 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 May 10 2019
The technical indicators continue to point to weakness, but a significant number of signals are advising that a bounce is at hand and probably will occur on Friday even with “bad” news on China trade negotiations. As long as the news is not horrendous, the indicates are signaling that investors are willing and preparing to buy back into stocks on Friday.