Friday saw the indexes once again under selling pressure with all 3 major indexes moving lower into the close. The S&P ended the day at 3009, down 74 points and ready to fall below 3000. Here are the technical indicators at the close of trading on Friday June 26.
Stock Market Outlook Chart Comments At The Close on Fri Jun 26 2020
The index closed below the 21 day moving average, and just above the 200 day moving average. This left behind a bearish candlestick for Monday.
The Upper Bollinger Band is moving lower and the Lower Bollinger Band is moving higher once again. The index looks set to enter another Bollinger Bands Squeeze Monday or Tuesday.
There are now 5 up signals in place as the 50 day has pushed above the 100 and 200 day moving averages but the chart itself is turning decidedly bearish and looks set to fall back below the 200 day moving average.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and back 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 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 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 a strong down 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 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 29 2020
The technical indicators are once more turning lower and indicating more selling will be seen on Monday. With the SPX index down 74 points on Friday, don’t be surprised if there is a sharp rally attempt especially if early in the day the index slips below 3000 which is likely. But any rally attempt won’t hold and is a chance to buy SPY Put Options in my opinion. As Covid19 cases continue to rise, the index needs more positive news to hold above 3000 and that is unlikely at present. A move below the 200 day moving average is expected on Monday. For Tuesday we could see another rally attempt but then another dip.
For Monday expect a close which could be as low as 2950.