Friday saw the best single day advance since August 13. The index which the day before had broken through the 200 day moving average and below 2860, saw a low volume rally day which pushed the index back to 2952. All of this was on the back on better than expected September unemployment numbers and a big increase in August numbers as well.
There were however rumblings over the weekend that perhaps the September jobless numbers would give the Fed room to wait before cutting interest rates in October as had been the “story” on Thursday. This weekend news might weigh on stocks as we enter the second week of October. Also this week trade negotiations get underway again with China in an effort to find some kind of resolution to the tariffs.
Let’s look at Friday’s closing numbers to see what Monday might bring for investors.
Stock Market Outlook Chart Comments At The Close on Fri Oct 4 2019
The 21 day moving average is still falling. The index on Friday opened higher and moved above both the 100 and 50 day moving averages.
You can also see that the Lower Bollinger Band is turning back up which is bullish.
The 50 and 100 day moving averages are still turning lower but the 200 day moving average is still climbing.
The closing candlestick is bullish for Monday although, with the index closing at the high of the day, some weakness will probably start the morning off. The two buy signals from September are still in place.
If you look at the chart, I have marked other days when the index slipped below the 200 day which brought in buyers and every one of those dips ended a down cycle. Whether Friday is the end of the recent pullback, we will find out this week.
Stock Market Outlook review of Oct 4 2019
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and not oversold.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued down signal on Fri Sep 27 2019. The down signal was still dominant 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 and positive.
- 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 strong up signal in place and only slightly 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 rising and no longer 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 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 was good 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 7 2019
The technical indicators continued to improve on Friday and the Slow Stochastic has a strong up signal in place to start off the week.
While the volume levels were low on Friday, which indicates concern among investors that the rally is not going to hold, the technical indicators don’t agree. Aside from MACD which is still negative, the other indicators are pointing to the rally as probably lasting into the first couple of days for this week.
Monday should start with a dip since the index closed at the high on Friday and is somewhat slightly overbought. That dip shouldn’t last and the index should move higher by the close on Monday.
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