Stock Market Outlook for Jan 6 2020 – Negative Open and Lower Close

As the fallout continues over the military strike in Baghdad killing Iran General Soleimani, markets moved lower on Friday.

Stock Market Outlook Chart Comments At The Close on Fri Jan 3 2020 

The SPX chart continues to be bullish despite the selling on Friday. The closing candlestick on Friday was bearish for Monday.

The Upper Bollinger Band is still rising while the Lower Bollinger Band has now started to turn up as well, which is bullish.

All the major moving averages are still climbing and there are three support levels in place. 3100 and 3075 are both light support with better support down at 3000.

Stock Market Outlook review of Fri Jan 3 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is positive and falling.

• 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. On Fri Jan 3 the signal was a lot weaker.

• 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 is falling.

• 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 very 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 falling.

• 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 moving sideways indicating a change in prices, higher or lower is not 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

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

2795 is light support

2745 to 2750 is light support

2725 is light support

2700 is light support

 Stock Market Outlook for Tomorrow – Jan 6 2020 

The technical indicators on Friday were not as negative as investors might assume.

There are still some up signals left including the Slow Stochastic and MACD, but signals are quite weak.

Other signals have turned bearish or as signaling a move lower.

Monday will continue to be affected by the Iran Middle East crisis. It won’t however take much for the index to recover and move back higher.

Monday will be lower by the close but trading during the day, while choppy, we should find out whether the crisis will affect stocks further or the market will regain lost ground.

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