The outlook for Friday was for stocks to trade in a choppy fashion and end the day slightly lower. Instead stocks moved higher and the S&P closed above 2800 for the first time since November 2018.
Stock Market Outlook Chart Comments At The Close on Fri Mar 1 2019
Friday saw the S&P close above 2800 for the first time since November. The closing candlestick was bullish. The 100 day moving average is still not above the 200 day and the 50 day moving average is still trying to climb but the close above 2800 is a good sign for the bulls.
Meanwhile the Upper Bollinger Band is falling and the Lower Bollinger Band is rising in what could be a Bollinger Bands Squeeze for mid-week,. This could send stocks higher or lower, but if the squeeze occurs there will be a change in direction.
There are still 3 up signals in place and 6 down signals. The down signals will begin to be dropped as the moving averages recover to their correct positions with the 21 day on top and the 50 day leading the 100 and 200 day moving averages. The 100 day moving average is trading below the 200 day and could cross above it at any time. This would be a major up signal if it occurs.
The 2600 level has anchored the rally since January 14. The 2700 level has been held for the entire month of February. Both of these are bullish signs.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and was rising on Friday.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Fri Jan 4 2019. On Thursday Feb 28 MACD issued an unconfirmed down signal. On Friday the down signal remained but was not confirmed.
- 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 moving sideways.
- 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 to up signal in place for Monday and it is overbought.
- 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 rising quickly.
- 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 indicating that prices will be moving lower shortly.
- 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 Resistance Levels To Be Aware Of:
2900 was support – this will be strong resistance
2860 was support – this will be resistance
2830 was light support and will be light resistance
2800 is strong resistance
2795 is light resistance
2745 to 2750 is light support
2725 is light support
2700 is light support
2675 is light support
2650 is support
2625 is light support
2600 is support.
There was good support at the 2550 level which is back to being support.
The 2500 level is support.
The S&P has light support at 2480 and better support at 2450.
There is 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 of 641 points as a drop to this level would be 21% and just 5% away from a full bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Mon Mar 4 2019
For Monday the technical indicators are mixed following Friday’s push above 2800. There is still a down signal to be confirmed by MACD but the Slow Stochastic is pointing to a chance for the market to push higher. The Relative Strength Index (RSI) shows strength and a chance for a higher close but the Rate Of Change indicates prices will be falling shortly. Overall we have a mixed picture.
While investors continue to wait for news on a potential trade deal with China, the market will trade in a choppy fashion but it should move higher by the close. A retest of 2800 should occur on Monday but I am still expecting the S&P to close higher by the end of the day.
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