Stock Market Outlook for Jan 23 2020 – Overbought, Choppy, Sideways With Bias Up

Stock Market Outlook - sideways slight bias upWednesday Jan 22 saw new highs again in the index by mid-morning but from there the index slipped lower.

By the close the index was pretty well flat for the day as the market continues to battle against being overbought.

Stock Market Outlook Chart Comments At The Close on Wed Jan 22 2020 

The SPX chart continues to be bullish although the closing candlestick from Wednesday is bearish for a continuation of the rally on Thursday.

There are still some indications that the index may enter a Bollinger Bands Squeeze if it does not move convincing higher. The Lower Bollinger Band is clinging to the 50 day moving average and should be falling below it. This needs to be watched for signs of a potential squeeze.

The 200 day moving average is continuing above the 3000 level and the 100 day is above 3100.

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.

Stock Market Outlook review of Wed Jan 22 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is positive but overbought and ocntinuing to move 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 up signal was still strong enough.

  • 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 moving lower although it is more sideways than up or down.

  • 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 extremely overbought and has 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 overbought and moving 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.

  • 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 23 2020 

For Thursday the technical indicators are quite mixed but overall they are pointing more to the market remaining overbought, than to any kind of a pullback.

We should see dips again on Thursday but the close should see the index grind its way higher. The outlook then is sideways with dips but a bias holding to move the index higher.

Stock Market Outlook Archives

Stock Market Outlook - Bounce
On Friday the S&P started the day with a promising higher open but sellers took charge and the index fell. During the lunch hour the ....... Read More
Stock Market Outlook Lower and Bounce
On Thursday the S&P tested 3330. The dip at 3:00 PM found buyers but the close was weak as it rose higher to 3357. The ....... Read More
Morning Investing Strategy Notes
For FullyInformed Members here are the morning investing strategy notes for Thu Sep 17 2020. As well there is some information on a potential trade ....... Read More
Stock Market Outlook Bias Lower
Tuesday’s market reacted positively at the initial release of the Fed’s decision on interest rates and within 40 minutes of the announcement, the S&P was ....... Read More
Morning Investing Strategy Notes
For FullyInformed Members the morning investing strategy notes for Wed Sep 16 2020 touch on a couple of topics. There are no trades outlined for ....... Read More
Stock Market Outlook - Higher
Tuesday’s market started off strong with the S&P above 3400. By 1:30 the index was still holding above 4100 but was unable to make any ....... Read More
Morning Investing Strategy Notes
For FullyInformed Members the morning investing strategy notes for Tue Sep 15 2020 cover a number of topics including further upgrades done to two of ....... Read More
Stock Market Outlook Choppy Dips Higher
Monday’s market saw the anticipated bounce following the last week’s selling. All 3 indexes climbed including the S&P which reach 3383.54, up 1.2% on the ....... Read More