The rally on Friday was a result of another huge stimulus package for small business being passed. Investors aren’t concerned about the politics behind the stimulus packages but just the money itself as these stimulus plans are all working to keep the economy afloat. Friday marked a move back above 2800 with the S&P closing at 2836.
Stock Market Outlook Chart Comments At The Close on Fri Apr 24 2020
The SPX chart continues to be bearish with 6 sell signals in the chart. On Friday the index closed above 2800. The chart on Wednesday had been bearish and even without the Gilead’s anti-coronavirus drug remdesivir report being leaked the market was weak during the morning and showed signs of failing.
The 200 day moving average is still leading the market, which is typical in a bear market. It is followed by the 100 day and the 50 day. The 50 day is falling quickly but the 200 and 100 day are dropping but not quickly which indicates plenty of buying is happening by investors. The 21 day is still turning back up and is nearing the 2725 valuation. A break above 2725 by the 21 day should set the index to push above 2900.
The closing candlestick on Friday is bullish for Monday. At present the Upper Bollinger Band is still dipping lower while the Lower Bollinger Band is rising. We should see another Bollinger Bands Squeeze this week. Overall the chart is bearish but it has encouraging signs of continuing to build strength and support.
Stock Market Outlook review of Apr 24 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and still positive.
- 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 weaker again on Friday.
- 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 falling and negative.
- 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 the place, the first up signal in 3 trading sessions.
- 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 slightly which points to slightly higher prices for stocks.
- 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:
2900 is resistance
2860 is resistance
2840 is resistance
2800 is resistance
2725 is light support
2700 is light support and marked a drop of 20.4%.
2675 is light resistant
2650 is light support
2625 is light support
2600 is support
2550 is light support
2500 was good support and marked a correction of 26.3%
2344 is the next level of support and marks a 30.9% correction.
2191 was the market low on March 23 and most analysts believe this is the low point we will see.
2100 is light support
2000 is good support and marks a drop of 1393 points for a 41% correction. Some analysts believe the index will fall this low before the bear market ends.
Stock Market Outlook for Tomorrow – Mon Apr 27 2020
For Monday, the technical indicators are somewhat split but the majority are pointing to a higher close.
Looking at the indicators above, many are losing their strength such as MACD but they are still pointing up for stocks. Other have weak signals such as the Slow Stochastic that is pointing to a weak up for Monday.
The outlook then is for stocks to see dips, even a move below 2800 is likely intraday. For some of the day we should see the index trade sideways but the close should be slightly higher than Friday’s close of 2836. That means dips on Monday are opportunities to setup trades.
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