Wednesday saw indexes sell lower amid doom and gloom economic reports and more selling in financial shares.
However all 3 indexes closed well off their lows of the day with the S&P down 2.2% to 2783 and the NASDAQ down just 1.4% to 8393.
Most investors were holding back as they waited to see how bad the Weekly Initial Unemployment Insurance Claims were on Thursday morning before markets opened.
Stock Market Outlook Chart Comments At The Close on Tue Apr 14 2020
The SPX chart continues to be bearish with 6 sell signals in the chart. On Wednesday the S&P moved back below the Upper Bollinger Band but stayed basically on line with Monday’s close. 2800 is bound to be a difficult valuation. It stalled much of the market advance throughout 2018 and early 2019.
The 200 day moving average is now leading the market, which is typical in a bear market. It is followed by the 50 day and the 100 day. The 21 day is turning back up.
The closing candlestick on Wednesday is bearish for Thursday.
Stock Market Outlook review of Wed Apr 15 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is moving sideways 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 Thursday March 26. The up signal was strong again on Wednesday.
- 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 sideways.
- 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 signaling 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 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 rising despite the decline on Wednesday. This could be advising that we will see higher prices shortly.
- 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:
2900 is resistance
2860 is resistance
2840 is resistance
2800 is resistance
2700 is light support and marked a drop of 20.4%.
2675 is light resistant
2650 is light support
2625 is light support
2600 is support
2550 is light support
2500 was good support and marked a correction of 26.3%
2344 is the next level of support and marks a 30.9% correction.
2100 is light support
2000 is good support and marks a drop of 1393 points for a 41% correction. More analysts are jumping onto this level as where the correction is heading.
Stock Market Outlook for Tomorrow – Wed Apr 15 2020
After the poor economic numbers on Wednesday many investors are waiting for the Weekly Initial Unemployment Insurance Claims which are released on Thursday.
Those numbers are bound to be bad but whether they will sink the market is questionable, especially with many countries talking about beginning to reopen their economies.
For Thursday we will continue to see weakness but there will also be rallies. The technical indicators are pointing to another day of weakness for Thursday and probably a lower close. However overall they are not very bearish so a drop on Thursday may be followed by a rally attempt for Friday.
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