Thursday saw a huge rally thanks to China’s announcement of meeting in October to discuss potential resolutions to the ongoing tariff war.
The S&P easily sliced through 2950 and 2960 to close at 2976.00 in a rally that added 1.3% to the index.
Stock Market Outlook Chart Comments At The Close on Thu Sep 5 2019
The potential of a Bollinger Bands Squeeze is ending as you can see the Upper Bollinger Band is now rising and the Lower Bollinger Band is falling.
The most significant event in the S&P chart is a new buy signal on Sep 5 as the 21 day moving average rose back above the 100 day moving average. This negates the Aug 29 sell signal.
The closing candlestick is bullish for Friday although often this candlestick signals a dip on the following day, which would be Friday.
The 50 day moving average is still falling but the 100 day moving average is no longer slipping below the 2900 level.
The 200 day moving average is still trending sideways.
The S&P chart still looks better for Friday as the candlestick is above all the major moving averages and pushing the Upper Bollinger Band. This, and the buy signal, are among the best signs the chart has seen in weeks.
Stock Market Outlook review for Thu Sep 5 2019
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 Thurs Aug 29. The up signal was stronger again on Thursday.
- 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 moving sideways just below overbought signals. That could be advising us that the index is not yet ready to dip from being overbought.
- 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 signal has a strong up signal in place for Friday but is also showing very overbought signals which could be advising that the index rally will slow.
- 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 overbought.
- 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 turned sideways indicating that prices are not expected to change by much on 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 and Resistance Levels To Be Aware Of:
3000 is resistance
2960 is light resistance
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 Sep 6 2019
Friday we get the August jobs numbers. They may be lower than anticipated but even if the index sells-off initially, it will rebound as the outlook is up at the present time.
Friday should see some bigger dips as the index is now quite overbought, but these dips are opportunities to setup more trades, as the overall market direction is higher, at the present time.
The technical indicators are strongly bullish for Friday with multiple up signals from both the S&P chart and technical indicators.
The index is now overbought and that usually means dips could become a bit deeper than anticipated. I will be using any dips on Friday for setting up more Put Selling trades, because at present, the outlook is up for stocks which means, dips are trade opportunities.
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