Market action on Thursday continues to point to an underlying strength in the markets. It must be confounding to the bears to see the index maintain the trading range, day after day for weeks now. Every large dip has found buyers and Thursday’s market still pushed higher for a second day on better but still light volume.
Stock Market Outlook Chart Comments At The Close on Thu Oct 10 2019
The 21 day moving average is now down to the 2960 level and is showing no signs that it will not continue to fall further.
The Bollinger Bands are both turning sideways as the market remains range bound. This is normally bearish.
The 50 day moving average is still falling but the candlestick on Thursday managed to push above it and close slightly above it. This now places the SPX index above all three major moving averages. Often this will signal a bit of an overbought market.
The closing candlestick on Thursday was bullish for Friday.
The 100 day moving average is still falling. Only the 200 day moving average is still climbing.
The two buy signals from September are still in place.
The S&P chart is obviously mixed but has a slight bias to the upside.
Stock Market Outlook review of Thu Oct 10 2019
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising but negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued down signal on Fri Sep 27 2019. The down signal was weaker on Thursday but still present.
- 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 has a down signal in place.
- 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 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 and Resistance Levels To Be Aware Of:
3000 is resistance
2960 is resistance
2950 was light support
2900 is light support
2860 is light support
2840 is 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.
Stock Market Outlook for Tomorrow – Fri Oct 11 2019
Many of the technical indicators are not actually rising or falling but moving more sideways than either up or down. The Bollinger Bands are reflecting those movements as they too are turning sideways.
All 3 major indexes (SPX, DOW, NASDAQ) are trading with heavy emotions. The bulls do not want to give up and miss out on what they expect to be another big rally, if there is a trade agreement with China. The bulls are not actually buying the rally but instead are buying the dips and then selling partial positions in the spikes. This is showing up in declining volumes but without the index actually falling.
In most markets a sideways trend filled with weakness which we have been watching for weeks, would be considered signals for a potential market top. However that is not the case at present. Instead investors are fearful they will miss another leg higher and at the same time fearful they could get caught in a drop. This results in the sideways motion we have seen since the summer.
For Friday there are no indications the market intends to move any differently. The outlook remains choppy and dips are likely but they will find buyers.
As long as there is no disappointing news on the trade negotiations the index should close higher on Friday for a third day. Any news that is “bad” on the trade negotiations will see the market drop back, but it will not end the ongoing bull market. Instead it will be just a stalling of the inevitable trend higher. The underlying current of the market is still up but without a strong catalyst, the sideways motion will continue.
Stock Market Outlook Archives
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