On Thursday stock indexes continued their advance on the back of a belief stimulus of some kind will have to be agreed to. The S&P spent most of the day climbing, particularly in the afternoon. The index closed at the high of the day, 3447. The S&P is now just 141 points away from the 52 week high set on Sep 2.
Stock Market Outlook Chart Comments At The Close on Thu Oct 8 2020
On Thursday the index closed above both the 21 and 50 day moving averages and at the Upper Bollinger Band. The closing candlestick was bullish for Friday.
The close at the Upper Bollinger Band commonly sees a dip in the early morning of the next day so watch for a bit of weakness to start the day or into early-morning trading.
The Upper Bollinger Band is still turning higher and the Lower Bollinger Band is falling lower, which is bullish.
The 200 and 100 day moving average is still climbing.
The 21 day moving average is also turning higher as is the 50 day.
There are still 6 up signals and 4 down signals. The SPX chart is continues to gain a stronger bullish stance
Stock Market Outlook review of Thu Oct 8 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Oct 1. On Wednesday the up signal was stronger.
- 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 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 an up 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 which could indicate that prices will not advance as much on Friday as we have recently seen in the rally.
- 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:
3600 is resistance
3500 is resistance
3450 is resistance
3400 is resistance
3375 is support
3300 is support
3275 is support
3200 is support
3150 is support
3050 is support
3000 is support
2975 is light support
2950 is light support
2900 is light support
Stock Market Outlook for Tomorrow – Fri Oct 9 2020
For Friday, the 3400 level is still resistance until the index moved above 3450 which should happen on Friday.
The technical indicators are almost unchanged from Thursday except for the Rate Of Change which is moving lower. Usually this indicates we will not see prices move as high on Friday as we have seen in the past several days.
Overall though we should see some weakness on Friday but the day should end with the index above 3450 as the index continues to hold a bias higher.
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