The third week of November was a shortened week. Friday was a half day that closed at the lows of the day. This often sets the indexes up for a bounce attempt.
Let’s look at the closing numbers from Friday and see what they can tells us about Monday’s outlook.
Stock Market Outlook Chart Comments At The Close on Fri Nov 23 2018
The S&P index closed below the 200 day and 21 day moving averages again on Thursday and at the lowest level since Oct 29.
It closed inside the Lower Bollinger Band which is a bit bullish.
The Upper Bollinger Band is trying to climb which to some extent is also a bit of a bullish sign.
The candlestick from Friday often signals a bounce attempt.
The 50 day moving average is still falling but has not yet crossed below the 100 day.
The SPX continues to struggle against 3 major sell signals and the break of the 2700 level on Tuesday last week.
The chart is very bearish.
Stock Market Outlook review of Fri Nov 23 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is negative and falling and oversold.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Tuesday Nov 20 2018. The down signal was 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 falling and nearing oversold.
- 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 down signal in place for Monday and is extremely oversold.
- 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 and oversold.
- 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 resistance.
2700 is resistance
2675 was light support
2650 was 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 26 2018
The S&P on Friday closed at its lowest level since Oct 29. This often sets the index up for a bounce but there is more selling still ahead for the index.
The technical indicators are showing a chance of a bounce but normally any bounce at this stage of the correction will be followed by more selling either later in the day on Monday or on the following day.
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