On Friday the S&P started the day with a promising higher open but sellers took charge and the index fell. During the lunch hour the 3330 level was quickly broken and the index slipped on large volume, thorough 3300. By the close investors had regain their composure and the index closed back above 3300 but below 3330 at 3319 for a loss of 37 points. The NASDAQ lost 116 points and closed at the lowest level of the month, 10,793.
Stock Market Outlook Chart Comments At The Close on Fri Sep 18 2020
On Friday the index closed below the 50 period moving average for the first time since May.
The closing candlestick was decidedly bearish but often a bounce off the 50 day should be expected.
The index has now been trading below the 21 day moving average for 9 straight days without being able to climb back above it. This is also bearish.
Both the Lower Bollinger Band and Upper Bollinger Band are turning lower which is bearish.
The 21 day moving average is also turning lower.
The 50, 100 and 200 day moving averages are still climbing. There are still 6 up signals and two down signal caused when the Lower Bollinger Band movied above the 100 day moving average back on July 27 and on Aug 31 above the 50 day. The SPX chart is becoming more bearish than bullish.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum was rising on Friday.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Sep 4. On Friday the down signal was stronger again.
- 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 moving sideways despite the drop on Friday.
- 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 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 nearing 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 also 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 and Resistance Levels To Be Aware Of:
3600 is resistance
3500 is resistance
3450 is resistance
3400 is resistance
3375 is resistance
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 Sep 21 2020
For Monday the technical indicators are becoming more bearish but there are still some signals that indicate we could still see a bounce attempt to start off the final week of September.
A number of the indicators are reading into oversold readings which also is often followed by a bounce attempt.
Finally, with the index closing below the 50 day moving average, we should expect the market to try to bounce.
Monday then should see a bounce attempt but the chance of a higher close may hinge on political events such as any positive news on another stimulus package or positive medical news on vaccine developments. For Monday then the question is, will we see a bounce?