Thursday saw all three indexes rally hard. The rally widened as more stocks participated. Three-quarters of the NASDAQ was moving higher, the best market breadth in weeks. Both the S&P and Dow made new highs. The Dow finally pushed beyond the January high. The NASDAQ closed above 8000 and should work its way to new all-time highs next week.
Stock Market Outlook Chart Comments At The Close on Thu Sep 20 2018
The S&P ended the day above the Upper Bollinger Band and still above the 21 day moving average. The closing candlestick is bullish for Thursday but remember that on Wednesday the closing candlestick warned of a down day coming soon. It could be Friday. The 21 day moving average is continuing to climb and the index is staying above it which is bullish.
The Lower Bollinger Band continued above the 50 day moving average which is bearish at present but the Upper Bollinger Band is turning higher which negates the bullish Lower Bollinger Band signal at present.
All the major moving averages are continuing to climb. Overall the chart looks bullish for Friday.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and rising.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thu Sep 6 2018. On Thursday MACD issued an unconfirmed up signal. We will have to see if it gets confirmed on Friday.
- 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 positive and 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 issued an up signal for 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 rose higher on Thursday.
- 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 for Friday.
- 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 Levels To Be Aware Of:
2860 I light support
2830 is light support
2795 is light support
2745 to 2750 is light support
2725 is light support.
2700 is support.
2675 is light support.
2650 is light support
2620 is light support
2600 is strong support.
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 as a drop to this level would be 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Fri Sep 21 2018
There are no negative signals presently for the market except for Wednesday’s closing candlestick.
All the technical indicators are turning back up and MACD has a new up signal which has yet to be confirmed.
Friday could see some weakness. Overall it is probably going to be a choppy day with some dips likely but the outlook is still higher. Friday should end positive, even if only slightly ahead of the weekend.
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