Friday was all about Turkey and investors decided despite better than expected profits for stocks in the quarter, they were taking profits. By the end of the day all three indexes were lower but the NASDAQ ended the week with another gain.
With futures all weekend pointing lower for Monday, let’s look at the closing analysis from Friday to see what we might expect for Monday.
Stock Market Outlook Chart Comments At The Close on Fri Aug 10 2018
The S&P ended the day just above the 21 day moving average. It touched the 21 day intraday and bounced off it but the close was near the lows of the day. This left a bearish candlestick for Mon Aug 13 2018.
All the major moving averages are still climbing but you can clearly see the Bollinger Bands Squeeze formed by the Lower Bollinger Band now up to above the 50 day moving average. The Bollinger Bands Squeeze at present is pointing to higher prices for the indexes coming out of the latest Bollinger Bands Squeeze but that might not be the case depending on the anticipated Monday’s move lower.
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and falling.
MACD Histogram: For MACD Histogram, I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9. MACD (Moving Averages Convergence / Divergence) issued an up signal on Mon Aug 6 2018. The up signal turned neutral on Friday.
Ultimate Oscillator: 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. The Ultimate Oscillator signal is positive and falling. It is ready to turn negative if there is more selling on Monday.
Slow Stochastic: 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. The Slow Stochastic has a down signal in place for Friday and is still overbought. That usually mean a stronger selling period for Monday.
Relative Strength Index: 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. The RSI signal is falling.
Rate of Change: 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. The rate of change signal is moving lower lower indicating lower prices should be expected.
Support Levels To Be Aware Of:
2795 is light support
2745 to 2750 is light support
2725 is light support.
2700 is support.
2675 is light support.
2650 is light support
2620 is light support
2600 is strong support.
There is good support at the 2550 level from where the market bounced back from the recent correction low on Feb 9.
The S&P has light support at 2480. It also has light support at 2450 and good support at 2425. Below that there is some support at 2400, 2380, 2350. 2300 has the most support at present but would represent a full correction as a drop to this level would be 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Mon Aug 13 2018
The technical indicators are are signaling a move lower for Monday.
The MACD signal has turned neutral so it won’t take much to turn it negative. The Rate Of Change is rapidly falling which usually means lower prices are ahead. The Slow Stochastic has a down signal in place. All the other signals are falling.
The futures show the index as opening lower but while that may happen there is always the potential for a bounce back. Any kind of “positive” news on the Turkey or even just tariffs in general, will send stocks back up.
The underlying trend is still higher but for now the short-term trend is down for Monday.
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