Fed Chair Powell’s comments Wednesday evening, sent stocks lower Thursday morning as the S&P fell to 2670. But then word of a trade negotiations with China reached investors and markets turned right around. The bulls have been in need of a catalyst and this was one most analysts have picked as “the one” that could send stocks higher.
The close saw strong gains on all 3 indexes as they closed just off their highs for the day.
Stock Market Outlook Chart Comments At The Close on Thu Nov 15 2018
The S&P index closed below the 200 day moving average again on Thursday but rose to the 21 day moving average by the close. This left behind a bullish candlestick for Friday although often the morning open can be weak.
The 50 day moving average is still falling and should it cross over the 100 day, it will be another major sell signal.
All the other moving averages including the 21 day are falling. The SPX is struggling against 3 major sell signals.
As well the Upper Bollinger Band is turning back down and is nearing falling below the 50 day. This is another bearish signal. The chart is bearish.
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 an up signal on Mon Nov 5 2018. The up signal was 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 rising.
- 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 down signal in place for Friday but note how the signal could easily change to up, should the SPX rally on 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 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 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:
2900 was good support – this will be strong resistance
2860 was good support – this will be resistance
2830 was light support and will be light resistance
2795 is light resistance
2745 to 2750 are light resistance
2725 is light support.
2700 is important support
2675 is light support
2650 is light support
2620 is light support
2600 is strong support and held the market up from the lowest pullback in the present correction
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 of 641 points as a drop to this level would be 21% and just 5% away from a bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Fri Nov 16 2018
The S&P bounced again today and continue to hold above the 2700 level. This is important for the market and continues to point to this correction following a normal course. If that is the case then Friday should see some weakness, especially in the morning but a higher close by the end of the day. The index has shown a lot of strength in trying to hold onto the 2725 support level as well as 2710 and 2700. We could see the index slip to below 2725 on Friday but then move higher and break to above 2745 or higher.
Technical indicators are also rising and MACD although it has lost a lot of its buy signal strength, refuses to turn negative. All of this points to the S&P and moving higher once again.
Stock Market Outlook Archives