On Friday May 11 2018, stocks rose easily in the morning but as the S&P crossed 2730 sellers stepped into the rally and took profits. This kept the rally in check for the remainder of the day and the S&P closed just below 2730 at 2727.72
Closing Statistics from Fri May 11 2018
The S&P rose 4.65 to 2727.72 advancing 0.17%
The NASDAQ Composite fell 2.09 to 7402.88
The Dow Jones Industrial Average rose 91.64 closing at 24,831.17 for a gain of 0.37% the largest of the 3 main indexes.
Stock Market Outlook Chart Comments At The Close on Fri May 11 2018
The S&P closed above all the major moving averages and above the Upper Bollinger Band. This is very bullish and overbought.
The closing candlestick is bullish for Monday.
The ongoing Bollinger Bands Squeeze is over and indications are the index will move higher.
The 21 day moving average is now at the 100 day and ready to move above it. When it does it should then move above the 50 day as well. Both of the are bullish signals.
The chart over the past three days has turned quite bullish.
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and unchanged for Monday.
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 an up signal on May 7. The up signal gained more strength on Friday.
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 positive and unchanged.
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 signal is up for Monday and overbought.
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 unchanged and is also overbought.
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 falling.
Support Levels To Be Aware Of:
2745 to 2750 was light support
2710 is light support.
2700 was support.
2675 was 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 May 14 2018
On Friday the rally paused and the S&P closed up just slightly on the day. This changed many of the technical indicators to readings of unchanged and overbought. With markets pushing higher, overbought signals are to be expected and normally at this point in the rally, they are desirable. Monday should see stocks open higher but then dip. Any morning dip is an opportunities to setup more trades in my opinion. Many investors missed this rally and are looking for an entry point. Any dips are currently being viewed for entry possibilities. That means taking advantage of dips to setup more trades to boost profits. The outlook for Monday is still higher for the S&P but the day will be choppy which should provide a number of opportunities to setup trades.
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