Stock Market Outlook for Fri Sep 7 2018 – Bounce Likely But Still Lower

I had expected a bounce attempt on Thursday but the NASDAQ decline continued instead. This pressured many stocks on the S&P to move lower as well.

By the end of the day the Dow Index was positive but both the S&P and NASDAQ ended with more losses.

Stock Market Outlook Chart Comments At The Close on Thu Sep 6 2018 

The S&P during the day fell to the 21 day moving average but then bounced off it although it still closed lower. This though, left behind a candlestick pointing to another potential bounce attempt for Friday. A lot of Friday might be influenced by the jobs numbers which are to be released before markets open. A surprise to the upside could see a bounce in the index.

All the major moving averages are still climbing which is bullish. The 21 day moving average is also rising.

Stock Market Outlook review of Thu Sep 6 2018

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is positive and falling.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Fri Aug 24 2018. On Thu Sep 6 2018 a down signal was generated. It needs to be confirmed before the signal will change from up to down.

• 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 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 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 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 Levels To Be Aware Of:

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 7 2018 

For Fri Sep 7 2018 the technical indicators are now all pointing lower. There are no technical indicators advising that the index will move higher.

The reaction from August non-farm payroll numbers is the big unknown this evening and makes predicting the outlook for Friday more difficult.

If there was no unemployment numbers on Friday, the outlook would be lower for the S&P.

The technical indicators are reaching a point where a number are pointing to a potential bounce. However if there is a bounce on Friday it probably will not hold for the start of next week.

Friday then could see another bounce attempt, but then a move lower.

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