Stock Market Outlook for Jan 31 2020 – Choppy, Dips Likely But Higher

With the WHO on Thursday afternoon announcing they saw no need for travel and trade restrictions, the index turned around and roared higher closing at the highs of the day on all three indexes.

Stock Market Outlook Chart Comments At The Close on Thu Jan 30 2020 

The SPX chart turned bearish on Friday Jan 24. Since then the candlesticks continue to point to weakness. on Thursday the candlestick is bullish and above the 21 day moving average despite collapsing back to Monday’s morning lows early in the day. Normally though we will see the index open and dip or open lower and rally higher after closing on Thursday at the highs of the day.

The Upper Bollinger Band is falling while the Lower Bollinger Band is above the 50 day moving average. We should see a Bollinger Bands Squeeze early next week.

The major moving averages are starting to lose momentum and the 21 day moving average turning lower.

There are four support levels in place. These are 3200 which may get tested this week, 3100 which is a full 100 points lower, 3075 which is light support and 3000 which is major support.

For Friday the chart is starting to turn bullish.

Stock Market Outlook review of Thu Jan 30 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is negative but rising.

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

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Friday Jan 24. At the close on Thursday the sell signal was still strong, but it was slightly weaker than the signal on Wednesday.

• 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 rising.

• 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 an up signal in place for Friday.

• 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 rising.

• 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 also rising.

• 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:

3325 is resistance

3200 is light support

3100 is light support

3075 is light support

3030 is very light support

3000 is good support and if the S&P fell this low it would mark a normal correction in a bull market

2960 is light support

2900 is light support

2860 is light support

2840 is good support

2800 is strong support

 Stock Market Outlook for Tomorrow – Fri Jan 31 2020 

For Friday the technical indicators turned right around in the afternoon and are rising. There is even an up signal from the Slow Stochastic for Friday.

We will still see a choppy day on Friday and dips are likely but the close will be higher.

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