On Friday investors tried to close higher on all 3 indexes but by the close the index managed to end the day up just half a point to end the day at 3483.
Stock Market Outlook Chart Comments At The Close on Fri Oct 16 2020
On Friday the index closed above both the 21 and 50 day moving averages and below the Upper Bollinger Band and once again just below 3500 level. The closing candlestick is bullish but often the following day is weaker, which in this case would be Monday.
The Upper Bollinger Band is still turning higher and the Lower Bollinger Band is falling lower, which is bullish.
The 200, 100 and 50 day moving averages are climbing.
The 21 day moving average is also still turning higher and may push above the 50 day this week, which would be bullish.
There are still 6 up signals and 3 down signals. The SPX chart is still showing some weakness or a chance to stall here but it remains above all the moving averages which is still bullish.
Stock Market Outlook review Oct 16 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising 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 Oct 1. On Friday the up signal was a bit stronger.
- 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 falling.
- 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 and is only slightly 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 moving sideways.
- 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 which signals investors should expect stocks prices to change on Monday.
- 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 and Resistance Levels To Be Aware Of:
3600 is resistance
3500 is resistance
3450 is support
3400 is support
3375 is support
3300 is support
3275 is support
3200 is support
3150 is support
3050 is support
3000 is support
2975 is light support
2950 is light support
2900 is light support
Stock Market Outlook for Tomorrow – Mon Oct 19 2020
At the close on Friday, the 3450 level is still support for the market. A close above 3500 is very much a probability, especially if a stimulus package of some kind, is agreed to this week.
For Monday the technical indicators are primarily still positive. Even MACD has a stronger up signal for Monday in place. The Slow Stochastic however is still signaling lower despite Friday’s market action.
The closing candlestick on Friday often signals a down day and that could occur on Monday. However at the close the majority of the technical indicators were positive and pointing to a higher close for the first day of the new week.
Therefore the outlook is for some weakness on Monday in stocks, but a higher close is expected.
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