Stock Market Outlook for Mon Dec 9 2019 – Overbought, Morning Weakness But Bias Still Higher

Friday was an excellent day for the bulls. Huge November non-farm payroll numbers that beat every estimate, sent the markets soaring higher.

The end of the day saw the S&P up 28 points to 3146 and the NASDAQ up 85 points to 8656. The SPX is just 8 points below the all-time high and historically entering a more bullish period for December.

Stock Market Outlook Chart Comments At The Close on Fri Dec 6 2019

The SPX chart remains bullish, and on Friday the index closed near the Upper Bollinger Band.

The closing candlestick is bullish for Monday.

The 21 day moving average is back climbing which is bullish but the Bollinger Bands are now into a Bollinger Bands Squeeze which could be bearish or bullish. At present the outlook for the index to break higher out of the squeeze.

Aside from the 21 day moving averages the remaining major moving averages are still climbing including the 50, 100 and 200 day moving averages.

Light support is at 3075 which was tested on Tuesday was not tested further during the week.

The index is preparing to move to new highs.

Stock Market Outlook review of Fri Dec 6 2019

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising and positive.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Mon Dec 2 2019. On Friday the rally meant the down signal was 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 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 moving higher and shortly will begin to signal overbought.

• 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 rising signaling higher prices are ahead.

• 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:

3150 is resistance

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 – Mon Dec 9 2019 

After the close on Friday, the technical indicators are not overbought but the rally was huge and broad-based. Normally a rally such as we saw on Friday is following by some weakness and investors take some profits and adjust existing trades. We should expect to see some dips on Monday, especially in the morning but the close should see the indexes continue their advance. The S&P should make a new high intraday on Monday.

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