Stock Market Outlook for Mon Jul 2 2018 – Back To Weakness

Nike and bank stocks helped propel the markets higher on Friday and many stocks joined in the rally. But again, by late afternoon investors sold off the rally in the final 45 minutes of trading and all three indexes closed up just slightly for the day.

Stock Market Outlook Chart Comments At The Close on Fri Jun 29 2018

The S&P recovered the 50 day moving average on Friday and closed above it. The move higher and then the drop back into the close left behind a bearish candlestick for Monday. The 2700 level was still held but is being constantly pressured. The chance of it holding much longer is becoming limited as buyers begin to move lower especially with each rally fading into the close.

The 21 and 50 day moving averages are starting to turn lower while the 100 and 200 day are still climbing. The chart for Monday is bearish.

Stock Market Outlook review of Jun 29 2018

Stock Market Outlook: Technical Indicators Review:

Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative but trying to rise.

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 a a down signal on Jun 19. It was slightly weaker on Friday but still has a strong sell signal.

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 negative and falling.

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 is signaling up and is oversold enough for another bounce.

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 not as oversold and moving sideways.

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 neutral on the market direction for Monday.

Support Levels To Be Aware Of:

2745 to 2750 was light support

2725 was 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 Jul 2 2018 

For Monday the outlook is poorer than it was for Friday. The lost of rallies into the close is pushing buyers to move lower which means there is a good chance for the 2700 level to break on Monday. Investors continue to fear the potential of what a global trade war could bring. The chance that this fear will dissipate quickly is slim. Monday looks weaker to start off July and will end lower for all 3 indexes.

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