Wed Apr 3 2019 saw the S&P push higher through the morning reach 2885, just 65 points from the all-time high. When the rally stalled just after 11:00 AM, sellers kept showing up right through the lunch hour. As the afternoon commenced, there was no attempt to push back against the sellers and the rally gave way as volume rose and selling dominated. At one point shortly after 3:00 PM the S&P fell to 2865 before buyers once again returned and pushed the index to close up 6 points.
The NASDAQ was actually a bit stronger on Wednesday than the S&P. It closed up half half a percent for a 46 point gain and within 5 points of the 7900 level.
The drop in the afternoon was disappointing but there will be more dips ahead as the indexes push to break to brand new highs.
Stock Market Outlook Chart Comments At The Close on Wed Apr 3 2019
The S&P closed above the 21 day moving average again on Wednesday and at the Upper Bollinger Band. It left behind however a bearish candlestick for Thursday.
The Bollinger Bands Squeeze with the index moving higher.
All major moving averages are back where they belong and the 50 day and 100 day are both moving away from the 200 day.
The Lower Bollinger Band should fall below the 200 day moving average Thursday or Friday which is another bullish signal.
The SPX is stronger tonight and there is a confirmed up signal from MACD after the close. However the closing candlestick points to some choppiness ahead.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and rising.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Tuesday April 2. It was confirmed today.
- 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 rising.
- 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 an up signal in place and is now 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 rising and is also overbought.
- 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 indicating higher prices are coming for equities.
- 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 is strong resistance
2860 is light support
2830 is light 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.
There was good support at the 2550 level which is back to being support.
The 2500 level is support.
The S&P has light support at 2480 and better support at 2450.
There is 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 of 641 points as a drop to this level would be 21% and just 5% away from a full bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Thu Apr 4 2019
It was interesting to see the S&P give back the morning rally and fall to 2865 on Wednesday before rallying again. It looked more like another retest of support at the 2860 to 2865 level, before the index prepared for another push to reach 2900.
Thursday will be a choppier day and we could see deeper dips as the index is now oversold according to the technical indicators.
The close though should be positive and higher. That means dips are still opportunities to setup more trades.
2900 is strong resistance and it won’t break easily or in one session. We should be prepared for more choppy days but the bias still is higher.
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