Stock Market Outlook for Fri May 25 2018 – Weakness But Bias Is Up

Stock Market Outlook - Weakness But Higher

Stock Market Summary for Thu May 24 2018 

Stocks fell early on Thursday as President Trump canceled the summit meeting with North Korea. As the morning progresses however, stocks were revived on hope of a future summit meeting and comments from North Korea that seemed to indicate a desire to at some point proceed with discussions. The close saw the indexes fully recovered from the morning drop.

Closing Statistics from Thu May 24 2018 

The S&P fell 5.53 to 2727.76

The NASDAQ Composite fell 1.53 to 7424.43

The Dow Jones Industrial Average fell 75.05  to 24,811.76

Stock Market Outlook Chart Comments At The Close on Thu May 24 2018 

The S&P closed slightly lower again on Thursday but still well above the 2700 level and above the 21 day and all other major moving averages.

The 21 day moving average continued above all major moving averages.

The 200 day moving average is still climbing. Overall the chart continues to look bullish.

Stock Market Outlook review of Thu May 24 2018

Stock Market Outlook: Technical Indicators Review:

Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and moving lower.

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. The up signal was weaker 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 rising.

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 has a weak down signal in place and is overbought.

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 moving sideways rather than up or down.

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 moving sideways rather than up or down.

Support Levels To Be Aware Of:

2745 to 2750 was light support

2725 is light support.

2700 is support.

2675 is 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 25 2018 

After two days of large drops, there are still no negative technical indicators. There are weaker indicators, but none are negative.

The technical indicators continue to point to stocks as wanting to move higher. Drops on Wednesday and again Thursday, were being used by some investors to enter positions in stocks that have pulled back. Many investors were out of the present market place and as such they want to get back into stocks.

Friday should see some further weakness but overall the outlook is still for stocks to move higher.  So on Friday we will see weakness but the bias is still higher for stocks.

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