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Stock Market Outlook for Mon May 20 2024 – Choppy, Dip Possible But Still Up

May 19, 2024 | Stock Market Outlook

Stock Market Outlook choppy dips like but upPrior Trading Day Summary:

On Friday investors spent most of the day taking profits until by 2:30 the index was down around 5285. Buyers then stepped back in and pushed the index to close at 5303, back above the 5300 level. Volume was 3.6 billion on the SPX but new lows were down at 25 while new highs were 187. 50% of all stocks were rising by the close with the rest either falling or unchanged.

The NASDAQ saw another heavy day of trading with 9.7 billion shares traded. Up volume was just 37% of all volume and only 45% of all stocks were rising, but the close saw only 12 points lost for the NASDAQ. It closed at 16,685.

With both the PPI and CPI reports out-of-the-way, investors are next focused on earnings from NVIDIA (NVDA) which are due out on Wednesday. However before then there are other companies reporting earnings and they will have some impact on market direction or certainly market action. AMong them is Palo Alto Networks (PANW) which reports on Monday after the close .

Let review the closing technical signals from Fri May 17 2024 to see what to expect on Mon May 20 2024.


Stock Market Outlook: SPX Closing Chart For Fri May 17 2024

The index closed above the 21 day moving average and the 50 day and just below the Upper Bollinger Band. This is bullish.

The closing candlestick is bullish but also signals Monday could be somewhat choppy.

The 21 day moving average is still below the 50 day moving average for a down signal but you can clearly see in the chart the 21 day is almost ready to move above to 50 day. This will be a major up signal.

The 50 day moving average is climbing which is bullish.

The 200 day moving average is still climbing. The 200 day is at 4807 which is bullish and the 100 day is also climbing to 5015.

The Lower Bollinger Band is below the 100 day moving average and rising which is bullish. The Upper Bollinger Band is turning higher. This is also bullish.

The S&P chart is bullish for Monday with a earning to be prepared for a somewhat choppy day.

SPX Stock Market Outlook review of Fri May 17 2024 – chart courtesy TradingView


Stock Market Outlook: Technical Indicators Review

Momentum: Momentum is falling and positive.

  • 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 May 3. The up signal gained more strength on Fri May 17 2024.

  • 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 rising and overbought.

  • 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 potential change signal in place and 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 and positive. It is overbought.

  • 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 rising strongly and signaling Monday will be higher.

  • 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.

Stock Market Outlook: Support and Resistance Levels

5310 is resistance
5300 is resistance
5275 is resistance
5250 is resistance
5225 is resistance
5200 is resistance
5190 is light support
5175 is light support
5150 is support
5125 is support
5115 is support
5100 is support
5075 is support
5050 is support
5025 is support
5000 is light support


Stock Market Outlook for Mon May 20 2024 

On Monday the technical indicators are still primarily showing stocks are overbought but there remains room for more upside.

The closing candlestick on Friday warned that today would be choppy and could even see some dips. The close though will be positive. The technical indicators are also in agreement despite stocks being overbought.

Investors will be focused on earnings from Palo Alto Networks (PANW) on Monday after the close. Investors should expect a higher close as a result.


Potential Economic and Political Market Moving Events

On Wednesday we get May’s FOMC minutes. That may end up being the most significant economic event this week.

Monday:

There are no reports released today.

 






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