Stock Market Outlook for Fri May 24 2019 – Potential Bounce But Lower

Potential Bounce But Lower

Thursday saw stocks move lower and once again come close to challenging the support at the 2800 level.

During the day the index slipped to below the 100 day moving average although it managed to push back up and close at the 100 day, an important technical barrier.


Stock Market Outlook Chart Comments At The Close on Thu May 23 2019 

On Thursday the index fell below the 100 day moving average and reached the Lower Bollinger Band. That band is just above 2800 having fallen through the 50 and 100 day moving averages.

The drop to the 100 day resulted in the S&P bouncing in the final hour of trading and closing off the Lower Bollinger Band but back at the 100 day moving average, Despite the bounce, the action is bearish.

The 21 day moving average has fallen almost to the 50 day. A drop below the 50 day would be another bearish signal to the downside should it occur.

The chart is weaker for Friday.

Stock Market Outlook review of Thu May 23 2019


Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is negative and 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 weaker than Monday but rose from Wednesday’s close.

  • 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.

  • 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 signal is pointing down for stocks.

  • 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 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 Resistance Levels To Be Aware Of:

2950 is resistance

2900 is resistance

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 24 2019 

The technical indicators are more negative at the close of trading on Thursday. There are a number of sell signals now in place and the index fell to the 100 day moving average on Thursday. Most signals are now quite bearish. This has created an oversold condition for Friday which may set up a potential morning bounce but the close will be slightly more negative.


 

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