Stock Market Outlook for Mon Nov 19 2018 – Weakness But Still Higher

Friday was a see-saw day that saw wide swings in the markets.

By the close the Dow was up 124 points, the S&P up 6 points and the NASDAQ lost 11 points.

Stock Market Outlook Chart Comments At The Close on Fri Nov 16 2018

The S&P index closed below the 200 day moving average again on Friday but above the 21 day moving average. This left behind a bullish candlestick for Monday.

The 50 day moving average is still falling and should it cross over the 100 day, it will be another major sell signal.

All the other moving averages including the 21 day are falling. The SPX is struggling against 3 major sell signals.

As well the Upper Bollinger Band is turning back down and is nearing falling below the 50 day. This is another bearish signal. The chart is bearish.

Stock Market Outlook review of Fri Nov 16 2018

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is positive and 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 a bit stronger 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 rising.

• 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 weak up signal in place for Monday.

• 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.

• 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 light resistance

2745 to 2750 are 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 and held the market up from the lowest pullback in the present 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 19 2018 

There are now two up signals in place, one from MACD and the other from the Slow Stochastic.

The other indicators are all turning back up and rising.

Monday could see some weakness following the APEC summit in which the US continued to criticize China but overall that should not be a major market mover until after the G-20 meeting at the end of the month. If nothing comes from that meeting, markets could react negatively.

For Monday, markets look like they are weak but should still have a bias to the upside.

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