Stock Market Outlook for Fri May 17 2019 – Weakness, Dips But Bias Still Up

Thursday was another impressive day for the bulls. The S&P opened slightly higher than Wednesday’s close but then commenced to climb on the back of strong earnings from Walmart and Cisco.  As well analysts were back discussing a potential rate cut by the Fed before the end of the year and that brought in more buyers. With emotions running rather high, investors who feel they may have missed the best part of the rally, bought into the index until midway through the lunch hour, the market began to weaken. By the close though the S&P still had its best day of the month, rising 25 points to close at 2876. Last Friday, May 10 the S&P closed at 2881.40 and as of Thursday’s close the index was down just 5 points. It has been an amazing week.

Stock Market Outlook Chart Comments At The Close on Thu May 16 2019 

On Thursday the index closed back above the 50 day moving average and below the 21 day. The closing candlestick is bearish for Friday.

The lower Bollinger Bands is still falling as is the 21 day moving average.

The 50 day is beginning to weaken but the 100 and 200 day moving averages are still climbing.

The chart is still somewhat bearish but it is giving signals that it may turn sideways but not fall back to retest 2800 again, at least not for the next week.

Stock Market Outlook review for Thu May 16 2019

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is negative but still rising.

• 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 weaker than Wednesday.

• 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 unchanged.

• 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 not oversold.

• 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 also rising.

• 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 17 2019 

The technical indicators are still mixed but are once again showing bullish signals are continuing to dominate.

The Slow Stochastic at the close n Thursday issued a new up signal and the MACD indicator saw its sell signal from May 1, weaken again.

Friday looks more like a sideways day with dips but with a slight bias up. We should see a higher close perhaps to just below 2890.

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