Wednesday saw the index slip at the outset and fall to within a few points of Monday’s low. However instead of falling lower, buyers returned and stocks commenced a recovery rally similar to the rally on Tuesday. The close saw the S&P higher by 2.21 points. The NASDAQ also closed higher and the Dow managed to recover all but 22 points of the morning slide. The rally back on Wednesday was impressive for a second time in as many days. Here’s the technical outlook at the close on Wednesday.
Stock Market Outlook Chart Comments At The Close on Wed Aug 7 2019
The SPX chart is stronger. You can clearly see that the index has held the 200 day moving average for a third day. This will move the index higher on Thursday.
The 21 day moving average is pulling back which is bearish. The Bollinger Bands Squeeze is over which is bullish. The 50, 100 and 200 day moving averages are still climbing which is bullish.
Overall the chart is the most bullish it has been since last week when the decline commenced. A test of 2800 is still a distinct possibility but Thursday looks set to try to move up.
Stock Market Outlook review of Wed Aug 7 2019
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is negative and falling but there is still a strong oversold signal.
- 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 very 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 negative but rising for a second day.
- 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 an up signal in place for Thursday 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 rising.
- 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.
- 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 8 2019
The technical indicators have strengthened as of Wednesday’s rally.
There are down signals in place but a new up signal commenced on Wednesday in the Slow Stochastic and other signals have gained some strength.
Thursday should see the index try to build on Wednesday’s rally. There will be dips and trading will be choppy, but the close should be higher.
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