I had expected a choppy day on Friday but a higher close. Instead the day saw continual weakness in stocks lead by a number of big caps like Boeing stock (BA), Johnson and Johnson Stock (JNJ), Alibaba Stock (BABA), and Netflix Stock (NFLX) to mention just 4. The S&P despite this still flirted twice with the 3000 level but could not find buyers. Friday was also triple witching but volumes were lower than expected and in general, markets remain stuck sideways. The S&P closed down 11 points at 2986 but just 42 points from it’s all-time high.
Stock Market Outlook Chart Comments At The Close on Fri Oct 18 2019
The SPX chart is bullish but it is back to where we often have seen the index stumble.
The closing candlestick is bearish for Monday. All the major moving averages are now climbing. This includes the 21, 50, 100 and 200 day moving averages.
The Bollinger Bands are now moving parallel indicating no real change in direction is expected as the index remains stuck sideways.
The two buy signals from September are still in place. The dip down to 2976 on Friday found some buyers but overall there was a strong lack of buying interest.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive but falling.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Tue Oct 15 2019. 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 positive and 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 overbought for the start of the new week.
- 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.
- 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 moving sideways.
- 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:
3000 is resistance
2960 is light support
2950 was light support
2900 is light support
2860 is light support
2840 is support
2800 is strong support
2795 is light support
2745 to 2750 is light support
2725 is light support
2700 is light support
2675 is light support
2650 is support
2625 is light support
2600 is support.
Stock Market Outlook for Tomorrow – Mon Oct 21 2019
For Monday the S&P is set for another day of uninspiring trading as the index struggles to break above 3000 but investors also don’t want to sell out of positions ahead of any potential trade deal with China. The index therefore is stuck trading sideways.
Monday will be choppy to start off the week but no real change is expected. The day could end slightly higher or lower but overall sideways is the market direction.
With the S&P just 42 points below its all-time high, it is still looking for a catalyst to push it to a new high.