Wednesday 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: 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.