Wednesday saw the signing of Phase 1 of the China-USA trade deal that investors have looked forward to. While there are still many questions as to what the outcome of phase one will be, it does demonstrate that talks are continuing as both countries try to work out complex trade issues. Any type of an agreement will help the global economies as well as domestic ones even if it only removes some doubt for investors going forward. The other “big” event for Wednesday was the latest release of the Fed’s Beige Book which was favorable for the economy showing solid growth and to a lesser extent, continued gains in wage growth. Manufacturing was the weakest area again as it remained flat but consumer spending continues to push the economy. Labor markets are tight. There are only limited signs of inflation. All in all the release of the Fed’s Beige Book was primarily a confirmation that the economy is doing okay but growth is not robust despite a tight labor market.
During the day the S&P made another new high but once again by just several points as it reached 3298.66 intraday before closing up just 6 points to 3289.29. The index is overbought and slowly grinding higher.
Stock Market Outlook Chart Comments At The Close on Tue Jan 14 2020
The SPX chart continues to be bullish and the candlestick at the close of trading is mildly bullish for Thursday.
The Lower Bollinger Band is continuing to rise and a Bollinger Bands Squeeze is probably starting. 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 sideways.
- 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 Wednesday the signal was positive again but just barely. Again this is a warning to be a bit cautious and is a third day of very poor signals.
- 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 slowly lower.
- 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 up 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 back trending sideways.
- 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 – Thu Jan 16 2020
For Thursday the technical indicators are showing more of “steady and she goes” signals with none showing strength to the upside and none show strong weakness to the downside. The outlook remains sideways but weighing each indicators, the outlook is still higher. That means for Thursday investors should be prepared for another sideways day that will see dips but continue to hold a bias to the upside.
Stock Market Outlook Archives
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Morning Investing Strategy Notes for Thu Apr 25 2024
Stock Market Outlook for Thu Apr 25 2024 – Weakness and Lower
Morning Investing Strategy Notes for Wed Apr 24 2024
Stock Market Outlook for Wed Apr 24 2024 – Some Weakness But Higher Close
Morning Investing Strategy Notes for Tue Apr 23 2024
Stock Market Outlook for Tue Apr 23 2024 – Bounce But Lower
Morning Investing Strategy Notes for Mon Apr 22 2024
Stock Market Outlook for Mon Apr 22 2024 – No Change – Deeply Oversold Bounce Possible
Morning Investing Strategy Notes for Fri Apr 19 2024
Stock Market Outlook for Fri Apr 19 2024 – Deeply Oversold – Bounce Likely – Higher Close
Morning Investing Strategy Notes for Thu Apr 18 2024
Stock Market Outlook for Thu Apr 18 2024 – Deeply Oversold – Bounce Attempt Expected
Morning Investing Strategy Notes for Wed Apr 17 2024
Stock Market Outlook for Wed Apr 17 2024 – Another Bounce Attempt
