Friday saw the S&P open higher at 3150 and but then run into a wall of sellers. Selling intensified and the index fell all morning until by the lunch hour it had reached 3095. A short rally tried to recover above 3100, but failed. The index clipped until by 2:00 PM, the S&P was down to 3085. A late in the day rally, something that has become more common lately, managed to retake 3115 only to lose it in the last 30 minutes of trades. The S&P closed just below 3100 at 3097. The culprit on Friday was continued fear by investors that the reopening of businesses will see a large increase in COVID19 cases and potentially a re-closing of some businesses, despite government assurances that the country will not close again.
Stock Market Outlook Chart Comments At The Close on Fri Jun 19 2020
The Bollinger Bands Squeeze is showing signs of potentially ending shortly as the Lower Bollinger Band is turning back down. The closing candlestick on Friday was bearish for Monday.
The 100 day moving average is finally above the 200 day and the 50 day is just below the 200 day moving average.
This provides a fourth up signal.
Overall the index is more bullish than bearish but the index is still having trouble climbing.
Stock Market Outlook review of June 19 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and once again negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Friday June 12. The down signal was stronger 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 is falling and positive.
- 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 neutral signal in place for Monday.
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 falling.
- 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 falling.
- 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:
3200 is resistance
3150 is resistance
3050 is support
3000 is support
2975 is light support
2950 is light support
2900 is light support
2860 is light support
2840 is light support
2800 is good support
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
2100 is light support
2000 is good support and marks a drop of 1393 points for a 41% correction. Some analysts still believe the index will fall this low in the second half of 2020.
Stock Market Outlook for Tomorrow – Mon Jun 22 2020
For Monday, the S&P is facing the same issue as we saw on Friday, namely increased covid19 cases. The weekend saw more cases reported which is sure to rattle investors on Monday.
The technical indicators are all pointing to a neutral to lower day to start the fourth week of June.
Any hint at improvement in COVID19 numbers will jump-start the rally again but for Monday investors look set to continue to stay nervous. That means for Monday, it is back to weakness for stocks. As such, a negative close is expected. Just remember, it will only take a bit of better news on COVID19 infections, to see the rally restarted.
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