Stock Market Outlook for Fri Nov 23 2018 – Sideways With Bias Lower

Wednesday Nov 21 was a full day of trading ahead of the long holiday weekend, but the rally which started the day, fizzled out by the close.

The S&P squeaked out a small gain, The NASDAQ managed to add in the most points with a 63 point gain. The Dow ended flat with a very small loss.

Thursday was a holiday and Friday is half a day of trading with markets closing at 1:00 PM.

Stock Market Outlook Chart Comments At The Close on Wed Nov 21 2018 

The S&P index closed below the 200 day and 21 day moving averages again on Wednesday . It closed inside the Lower Bollinger Band which is a bit bullish.

The Upper Bollinger Band is now moving sideways and not falling. To some extent this is aalso a bit of a bullish sign while the Lower Bollinger Band is still falling.

The 50 day moving average is still falling but has not yet crossed below the 100 day.

The SPX continues to struggle against 3 major sell signals and the break of the 2700 level on Tuesday and with now 2 closes below it the outlook remains bearish.

Stock Market Outlook review of Wed Nov 21 2018

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is negative and falling and oversold.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Tuesday Nov 20 2018. The down signal was confirmed on Wednesday.

• 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 although it is more sideways than either up or down.

• 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 and is very oversold.

• 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 and 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 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 resistance.

2700 is resistance

2675 was 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 23 2018 

MACD confirmed the latest down signal. There are signs that the market is oversold and could bounce but on Friday the market will have low volume.

Overall Friday should be a sideways to lower day. It is Monday that could see a bounce attempt at some point during the day.

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