On Thursday investors were disappointed in the Weekly Initial Unemployment Insurance Claims which continued to be higher than many investors had expected. That put a damper on the morning selling, which is what was expected. The afternoon though saw investors probably preparing for the long weekend although volume stayed good throughout the day. Nonetheless losses were small and did nothing to change the overall outlook. For Friday though we could see another choppy day. Here is the technical outlook for Friday before the long memorial day weekend.
Stock Market Outlook Chart Comments At The Close on Thu May 21 2020
The SPX chart continues to be bearish with 6 sell signals in the chart and a Bollinger Bands Squeeze that is still underway.
There are some bullish signs however such as an up signal on May 1 when the 21 day moved above the 50 day moving average. As well the 21 day is now at the 100 day and looks set to move above it next week. That will be another up signal.
Another bullish signal is the index closed again today just above the 200 day moving average. This is the second straight day above the 200 day and the third close above the 200 day in 4 trading days.
Meanwhile the Upper and Lower Bollinger Bands are still climbing which is indicating that the index will move higher next week.
Finally the 50 day moving average is starting to turn back up, another bullish signal.
Bearish signals are still strong including the 200 day still leading the market and the very tight trading range over the past week.
The candlestick on Thursday is bearish for Friday.
Stock Market Outlook review of Thu May 21 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling but positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Tuesday May 19. The up signal was slightly weaker 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 falling but positive.
- 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 weak up signal in place for Friday.
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.
- 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 dipping advising that prices may drop a bit shortly.
- 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:
3000 is strong resistance
2950 is resistance
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 and most analysts believe this is the low point we will see.
2100 is light support
2000 is good support and marks a drop of 1393 points for a 41% correction. Some analysts believe the index will fall this low before the bear market ends.
Stock Market Outlook for Tomorrow – Fri May 22 2020
The 2950 level on the S&P has been resistance for some time and today it closed right at resistance, 2948.51. It will take further buying to finally push through sellers and retake 3000. That won’t happen on Friday ahead of the long memorial day weekend.
Historically this is a poor day for stocks which usually sees lighter volume and rather lackluster trading.
All the technical indicators that showed an up signal yesterday have flipped and are falling. None though are negative. Instead today was just some weakness with a bit of disappointment on the Weekly Initial Unemployment Insurance Claims numbers.
Friday is set to close negative but Tuesday should see stock begin again to try to push the index to 3000.
Long Weekend Special on Memberships
This long weekend there is a special on memberships for those investors looking for a longer time period. I will be posting more shortly on the upcoming Memorial Day Weekend Membership Special!
Stock Market Outlook Archives
Stock Market Outlook for Fri Apr 19 2024 – Deeply Oversold – Bounce Likely – Higher Close
Morning Investing Strategy Notes for Thu Apr 18 2024
Stock Market Outlook for Thu Apr 18 2024 – Deeply Oversold – Bounce Attempt Expected
Morning Investing Strategy Notes for Wed Apr 17 2024
Stock Market Outlook for Wed Apr 17 2024 – Another Bounce Attempt
Morning Investing Strategy Notes for Tue Apr 16 2024
Stock Market Outlook for Tue Apr 16 2024 – Deeply Oversold
Morning Investing Strategy Notes for Mon Apr 15 2024
Stock Market Outlook for Mon Apr 15 2024 – Expect A Bounce
Morning Investing Strategy Notes for Fri Apr 12 2024
Stock Market Outlook for Fri Apr 12 2024 – All About Bank Earnings
Morning Investing Strategy Notes for Thu Apr 11 2024
Stock Market Outlook for Thu Apr 11 2024 – Weakness and Lower
Morning Investing Strategy Notes for Wed Apr 10 2024
Stock Market Outlook for Wed Apr 10 2024 – All About The CPI Numbers
