Stock Market Outlook for Jan 15 2020 – Sideways With Up Bias Still In Place

Tuesday saw bank earnings from JP Morgan Chase and Citigroup, help move the market to further new highs. However later in the afternoon, new came that the first phase of a trade agreement with China would not remove the tariffs only insure new tariffs were not applied. This was not expected by investors and the market dipped twice before closing off the lows of the day but still lower by a few points.

Stock Market Outlook Chart Comments At The Close on Tue Jan 14 2020 

The SPX chart continues to be bullish but the candlestick at the close of trading on Tuesday is bearish for Wednesday.

The Lower Bollinger Band is continuing to rise and looks prepared to start a Bollinger Bands Squeeze.  It has now moved above the 50 day moving average. However all the major moving averages are still climbing.

The 200 day moving average is now above the 3000 level and preparing to move still higher which is bullish.

There are now four support levels in place. 3200 is very light support while 3100 and 3075 are better support. The best support is down at 3000 which is 8% lower.

Stock Market Outlook review of Tue Jan 14 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is positive and and rising for a second day.

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

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Friday Dec 13. At the close on Tuesday the signal was positive again but just barely. Again this is a warning to be a bit cautious.

• 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 not overbought and trending sideways for another day.

• 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 is overbought and has a weak 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 trending sideways.

• 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, indicating that lower prices are expected.

• 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:

3250 is resistance

3200 is light support

3100 is light support

3075 is light support

3030 is light support

3000 is support

2960 is light support

2950 was light support

2900 is light support

2860 is light support

2840 is support

2800 is strong support

 Stock Market Outlook for Tomorrow – Wed Jan 15 2020 

For Wednesday the outlook is turning sideways but continues to hold a bias to the upside. Breaking through 3300 was never going to be easy but the outlook is unchanged for the index to eventually push beyond it.

For Wednesday though, we should see some dips but for now, those dips are still opportunities to setup trades. The close should be flat to slightly higher on Wednesday. Tbere is growing weakness within the rally but on Wednesday we get the Fed’s Beige Book and that might just give the market a bit of push.

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