On Thursday the S&P tested 3330. The dip at 3:00 PM found buyers but the close was weak as it rose higher to 3357. The loss was 28 points on the day, not a lot but the 3330 is the 50 day moving average at present and a break of it would signal a further move lower. Let’s review the technical indicators at the close of trading on Thursday and what they predict for Friday.
Stock Market Outlook Chart Comments At The Close on Thu Sep 17 2020
On Thursday the loss of the rally left behind a bearish candlestick for Friday. It also may have set the index up for a dip below 3330 but then a potential bounce back. The index has now been trading below the 21 day moving average for 8 straight days without being able to climb back above it. This is also bearish.
Both the Lower Bollinger Band and Upper Bollinger Band are turning lower which is bearish.
The 21 day moving average is also turning lower.
The 50, 100 and 200 day moving averages are still climbing. There are still 6 up signals and two down signal caused when the Lower Bollinger Band movied above the 100 day moving average back on July 27 and on Aug 31 above the 50 day. The SPX chart is still more bullish than bearish but there are now more bearish signals than two weeks ago.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling again 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 Sep 4. On Thursday the down signal was a bit 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 a neutral signal in place and is 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 falling.
- 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 also 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:
3600 is resistance
3500 is resistance
3450 is resistance
3400 is resistance
3375 is resistance
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 Sep 18 2020
For Friday the technical indicators are showing further weakness. MACD is starting to gain some traction in strengthening down signals. The Slow Stochastic is back to neutral and oversold. Only the Ultimate Oscillator is rising. All the remaining technical indicators are pointing lower.
Friday could see a bounce attempt again as the market is oversold enough, but at the same time it could slip to major support at 3300.
The technical indicators are advising there is still more downside to the present move especially following 8 straight days of being unable to regain the 21 day moving average.
Friday looks mixed with the bias continuing for a lower close, but keep an eye out for a potential drop and then possibly another bounce attempt.