On Monday stocks staged a fairly wide breadth rally which came close to recovering almost all the drop on Friday. The S&P ended the day up 3.3% at 2626.65.
Stock Market Outlook Chart Comments At The Close on Mon Mar 30 2020
The SPX chart continues to be bearish and presents what looks like still looks like a classic bear market rally from last week.
There are now 4 sell signals on the market which are in the chart below in pink.
All the moving averages are plunging but the 21 day is starting to show signs of trying to turn sideways while the Lower Bollinger Band if continuing to turn sideways. Even the Upper Bollinger Band is also not falling as sharply.
Tuesday’s closing candlestick is bullish for Tuesday.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is 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 Thursday March 26. The up signal was stronger on Monday at the close.
- 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 was 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 a strong 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 rising and has stayed above the resistance level marked in the chart with a red arrow.
- 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 and has stayed above its most recent resistance line.
- 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:
2700 is strong resistance and was a drop of 20.4%.
2675 is light resistant
2650 is resistance
2625 is light resistance
2600 is resistance
2550 is light resistance
2500 was good support and marked a correction of 26.3%
2344 is the next level of support and marks a 30.9% correction.
2100 is light support
2000 is good support and marks a drop of 1393 points for a 41% correction. More analysts are jumping onto this level as where the correction is heading.
Stock Market Outlook for Tomorrow – Tue Mar 31 2020
For Tuesday all the indicators have turned to up. Only the sell signals in the S&P chart remain pointing to a negative outlook. Those signals tend to be lagging indicators while the technical indicators tend to be better short-term indicators.
The S&P then will see some dips on Tuesday and it will be a choppy session as the S&P attempts to push higher. It needs to break above 2650 and hold above it to build momentum to move still higher. That means on Tuesday we will see dips as sellers push back. Overall though the bulls should hold the day on Tuesday no matter how choppy it is and close above 2650.