On Friday the day was choppy. Investors were still trying to digest the Fed minutes which are bearish for stocks to advance beyond the most recent highs. As well the market remains overbought and that too is weighing on the markets.
Here is the outlook for Mon Nov 12 2018.
Stock Market Outlook Chart Comments At The Close on Fri Nov 9 2018
The index closed above the 200 day but below the 100 day moving average. This left another bearish candlestick for Monday. Note too that the Upper Bollinger Band bounced off the 50 day moving average on Thursday and moved higher on Friday advising a possibility of more upside to the present rally.
The 50 day moving average however, is falling and should it cross over the 100 day, it will be another major sell signal.
All the other moving averages are falling except for the 21 day which is trying to turn back up. The SPX is struggling against 3 major sell signals. The chart is still bearish.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and back rising.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Mon Nov 5 2018. The up signal was strong 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 signal is moving sideways from being 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 an up signal in place for Monday 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 falling from being 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.
- 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 good support – this will be strong resistance
2860 was good support – this will be resistance
2830 was light support and will be light resistance
2795 is support
2745 to 2750 are still light resistance
2725 is light support.
2700 is important support
2675 is light support
2650 is light support
2620 is light support
2600 is strong support held the market up from the latest pullback in the correction
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 of 641 points as a drop to this level would be 21% and just 5% away from a bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Mon Nov 12 2018
The technical indicators are becoming more split, after Friday’s session. There are though still more signs that the market will move higher, than move lower.
Monday should be a choppy session with spikes higher and drops lower but by the close the S&P should be somewhat higher.
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