Stock Market Outlook for Fri May 11 2018 – A Little Weakness But Still Higher

Summary:

On Thu May 10 2018 the S&P moved ahead adding another almost 1% to the rally and matching Wednesday’s gains. The index is now just 149.80 points away from the all-time high set in January.

Closing Statistics from Thu May 10 2018 

The S&P rose 25.28 to 2723.07 duplicating the advance from Wednesday.

The NASDAQ Composite rose 65.07 to 7404.98 leaving it just 232 points from the all-time high.

The Dow Jones Industrial Average rose 196.99 closing at 24,739.53 for a gain larger then Wednesday’s.

Stock Market Outlook Chart Comments At The Close on Thu May 10 2018 

The S&P closed above all the major moving averages and above the Upper Bollinger Band. This is very bullish but also almost always will see some pullback as the move above the Upper Bollinger Band is an overbought signal.

The closing candlestick is bullish for Friday.

The ongoing Bollinger Bands Squeeze is coming to an end and the Bollinger Bands are widening which is pointing to the index moving still higher.

The 21 day moving average is now at the 100 day and ready to move above it. When it does it should then move above the 50 day as well. Both of the are bullish signals.

The chart over the past two days has turned quite bullish.

Stock Market Outlook review of Thu May 10 2018

Stock Market Outlook: Technical Indicators Review:

Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and sideways with no change from Wednesday’s close.

MACD Histogram: For MACD Histogram, I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9. MACD (Moving Averages Convergence / Divergence) issued an up signal on May 7. That signal was stronger on Thursday.

Ultimate Oscillator: 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. The Ultimate Oscillator signal is positive and unchanged from Wednesday.

Slow Stochastic: 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. The Slow Stochastic signal is up for Friday.

Relative Strength Index: 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.  The RSI signal is rising

Rate of Change: 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. The rate of change signal is rising.

Support Levels To Be Aware Of:

2745 to 2750 was light support

2710 is light support.

2700 was support.

2675 was light support.

2650 is light support

2620 is light support

2600 is strong support.

There is good support at the 2550 level from where the market bounced back from the recent correction low on Feb 9.

The S&P has light support at 2480. It also has light support at 2450 and good support at 2425. Below that there is some support at 2400, 2380, 2350. 2300 has the most support at present but would represent a full correction as a drop to this level would be 20% and just 5% away from a potential bear market signal.

 Stock Market Outlook for Tomorrow – Fri May 11 2018

The rally has been strong for the past couple of days and that has brought the index into a bit of an overbought condition. That condition, plus the upcoming weekend should mean some weakness on Friday. However despite this anticipated weakness the outlook is still higher for the indexes.

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