Friday worked out as expected. The morning saw a move lower in the S&P but then the index fought back and by the close the SPX had managed to bounce to within a point of where it had opened the day.
It closed down 1 point to 2767.78. Despite the market trying to rally back from the morning drop, the movement on Friday was bearish.
Stock Market Outlook Chart Comments At The Close on Fri Oct 19 2018
The index closed just above the 200 day moving average, again on Friday, almost unchanged from Thursday’s close.
The day was choppy with a large drop in the morning and then the rest of the day spent with the index trying to rally back.
The sell signal from the 21 day falling below the 50 day remains in effect as of Oct 17 and continues to grow in strength.
The candlestick is bearish for Monday.
All the major moving averages are turning lower which is bearish for the market at present.
The Lower Bollinger Band is also falling indicating the index is going to move lower.
Stock Market Outlook: Technical Indicators Review:
All indicators moved back down on Friday.
Momentum: Momentum is negative and falling.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Wednesday Sep 26. The signal was slightly weaker on Friday but it remains a very strong down signal to start off the week.
- 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.
- 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. It had an up signal in place for 3 days last 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 turned down on Friday.
- 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 falling.
- 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 resistance
2745 to 2750 is light support
2725 is light support.
2700 is important support.
2675 is light support.
2650 is light support
2620 is light support
2600 is strong support.
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 as a drop to this level would be 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Mon Oct 22 2018
All the indicators are pointing lower for the day on Monday.
There are no indicators pointing to any upside action for Friday. The outlook then, is lower.
Stock Market Outlook Archives
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Morning Investing Strategy Notes for Tue Apr 23 2024
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Morning Investing Strategy Notes for Thu Apr 18 2024
Stock Market Outlook for Thu Apr 18 2024 – Deeply Oversold – Bounce Attempt Expected
Morning Investing Strategy Notes for Wed Apr 17 2024
Stock Market Outlook for Wed Apr 17 2024 – Another Bounce Attempt
Morning Investing Strategy Notes for Tue Apr 16 2024
Stock Market Outlook for Tue Apr 16 2024 – Deeply Oversold