Thursday saw a poor bounce attempt which failed to recover the 2800 level. Volumes fell lower and buyers refused to participate. The index closed up on the day but below the important 2800 level. While this was the outlook for Thursday, it would have been nice to see the market surprise me and close above 2800. Tonight though, all of this won’t matter as tweets from President Trump warning of Tariffs with Mexico has the market futures tumbling. Friday is the final day of May and it looks like a fitting end to what has been a dismal month for investors.
Stock Market Outlook Chart Comments At The Close on Thu May 30 2019
On Thursday the index closed just above 200 day moving average after reaching it late afternoon. The 21 day moving average is further below the 50 day after which is continuing to confirm Tuesday’s sell signal. This is the first sell signal from the moving averages in 3 months.
The candlestick at the close pointed to another bearish day for Friday. As well the Lower Bollinger Band is now below the 2800 valuation and the 200 day moving average which are bearish signals.
The chart at the close on Thursday is quite bearish and points to more downside to come although the technical indicators are advising be ready for a bounce.
It would be rare for the index to break the 2800 support level without rebounding. As well normally we should get a better bounce off the important 200 day moving average. As explained yesterday, almost always there is a bounce off important technical indicators like the major moving averages and the 200 day is the most major of all moving averages.
Stock market outlook review of Wed May 29 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 gained strength which is pointing to more downside ahead. It is though very oversold and a bounce should be anticipated.
- 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 and still moving lower. It is reaching oversold readings.
- 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 but is into extreme oversold readings which normally point to a bounce.
- 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 trying to rise and is very oversold.
- 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 and at oversold readings.
- 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 resistance
2830 is light resistance
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 31 2019
If it were not for President Trump’s tweets, the SPX probably would have tried to bounce again on Friday. Things though can change quickly and any good news will send the index soaring back above 2800. If that should happen, which I am not expecting at present, buying of stocks will be near panic levels as investors will run to get back into stocks and ride them back above 2800 to at least 2850.
For Friday the chart is bearish as are the technical indicators. But they are also pointing to a very oversold market that is right at the 200 day moving average. As well the 2800 level is strong support and the chance that the market won’t recover it at least one time is very small.
So the outlook is now lower for Friday thanks to news regarding potentially new tariffs with Mexico. However following that, we should see a move early next week to try to regain the 2800 level. The outlook then is Down and then Back Up.
Stock Market Outlook Archives
Stock Market Outlook for Fri May 17 2024 – Overbought – Choppy Bias Lower
Morning Investing Strategy Notes for Thu May 16 2024
Stock Market Outlook for Thu May 16 2024 – Choppy But Higher
Morning Investing Strategy Notes for Wed May 15 2024
Stock Market Outlook for Wed May 15 2024 – CPI Numbers – Choppy – Dips Likely But Higher
Morning Investing Strategy Notes for Tue May 14 2024
Stock Market Outlook for Tue May 14 2024 – All About The PPI Numbers – Mixed Outlook
Morning Investing Strategy Notes for Mon May 13 2024
Stock Market Outlook for Mon May 13 2024 – Overbought – Dips Likely But Higher Close
Morning Investing Strategy Notes for Fri May 10 2024
Stock Market Outlook for Fri May 10 2024 – Overbought – Dips Likely But Bullish
Morning Investing Strategy Notes for Thu May 9 2024
Stock Market Outlook for Thu May 9 2024 – Some Weakness – Possible Lower Day But Still Bullish
Morning Investing Strategy Notes for Wed May 8 2024
Stock Market Outlook for Wed May 8 2024 – Still Bullish
