Tuesday’s rally last just the day as on Wednesday investors’ focus shifted to the possibility of a recession. The 10 year treasury yield fell below the 2 year yield which analysts believe are signaling an upcoming recession.
That signal sent stock valuations lower right at the outset of trading. By the close the indexes had come off their worst one day plunge for 2019.
Stock Market Outlook Chart Comments At The Close on Wed Aug 14 2019
The SPX chart was gaining strength but on Wednesday, it was lost as the index collapsed in the worst one day move for this year. The closing candlestick was bearish for Thursday. The Upper Bollinger Band is continuing to fall while the Lower Bollinger Band is also falling. The 21 day moving average is almost ready to fall below the 50 day moving average. This will be a strong sell signal. The other three moving averages, then 50, 100 and 200, are all moving higher.
Stock Market Outlook: Technical Indicators Review:
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 Thursday July 18. The down signal was stronger 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 negative and 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 signal has a down signal in place for Thursday.
- 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 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:
3000 is resistance
2960 is light resistance
2900 is light support
2860 is better 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.
Stock Market Outlook for Tomorrow – Thu Aug 15 2019
Wednesday was a rough day for investors. Thursday should start with a rally as investors jump back into stocks.
I think it is too early though for any lasting rally. I
think we will see the index push higher at the open and then sell lower. By the close, I am expecting the markets to be negative.