Futures overnight on Tuesday showed Wednesday would open lower following Iranian missile attacks on Iraq bases where US troops were stationed. There were no casualties but investors worried this would be the start of an escalation between the US and Iran. By Wednesday’s open however investors had a change in outlook and instead of selling stocks lower they turned the markets sideways with an up bias. Following a short news conference by President Trump, stocks shot to new all-time highs on the S&P and NASDAQ indexes. It was a remarkable turn around from what the futures had warned would be a strong down day. The last half hour of trading the some of the rally given back but the S&P still closed higher, up almost 16 points at 3253.05 for a half percentage point gain.
Stock Market Outlook Chart Comments At The Close on Wed Jan 8 2020
The SPX chart continues to be bullish and on Wednesday the closing candlestick is also bullish for Thursday.
The Upper Bollinger Band is starting to turn sideways which is bearish, while the Lower Bollinger Band is turned up, which is bullish but we could see another Bollinger Bands Squeeze shortly.
All the major moving averages are still climbing and 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 8 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and back rising.
- 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 Tuesday MACD issued an unconfirmed down signal and did not confirm it 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 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 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 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 still 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 9 2020
The bull market remains resilient which also means the chance of it reaching 3300 this month is very high.
The technical indicators are mixed. Some of the indicators have turned back to up following Wednesday’s gains and strong bullish market action. Other indicators are still pointing lower.
Overall we could see some sideways motion on Thursday and even a dip or two into negative readings, Overall though, with MACD still not confirming a down signal, Thursday looks set to continue to rise. It will be a choppy day with dips but the close will see the index higher even if only slightly.
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