Stock Market Outlook for Thu Jan 11 2018 – Overbought, Weakness Bias Still Higher

Stock Market Outlook - Overbought, morning weakness, higher

What Happened On Wed Jan 10 2018

Markets on Wednesday finally took a bit of a breather following a strong start to 2018. The weakness though drew in buyers who snapped up shares of stocks that dipped. The day ended with the indexes sitting with only slight losses.

Closing Statistics for Wed Jan 10 2018

S&P 500 Index Close

The S&P index ended down 3.06 to 2748.23

Dow Jones Index Close

The Dow Jones ended down 16.67 to 25369.13

NASDAQ Index Close

The NASDAQ closed down 10.01 to 7153.57

Stock Market Outlook – Review of Wed Jan 10 2018

Chart Comments At The Close:

Wed Jan 10 2018 ended with the S&P back inside the Upper Bollinger Band but leaving the day with a bearish to neutral candlestick. The close didn’t predict much of a drop for Thursday. If anything, the close seemed more bullish for Thursday than bearish.

The Lower Bollinger Band is below the 50 day moving average which is bearish but all 3 major moving averages are climbing as is the 21 day, which is bullish.

Stock Market Outlook review of Wed Jan 10 2018

Stock Market Outlook: Technical Indicators:

Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and moved sideways but gave no indication of a down day ahead.

MACD Histogram: For MACD Histogram, I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9. MACD (Moving Averages Convergence / Divergence) issued a buy signal on Jan 4. The buy signal continued strong for Thursday.

Ultimate Oscillator: 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. The Ultimate Oscillator signal is positive and moving sideways. It is still showing overbought.

Slow Stochastic: 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. The Slow Stochastic is extremely overbought and issued a down signal at the close on Wednesday.

Relative Strength Index: The relative strength index is set for a period of 5 which gives it 5 days of market movement to monitor.  It often is the first indicator to show an overbought or oversold signal.  The RSI signal is overbought and falling.

Rate of Change: 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.  The rate of change signal is positive and and moving lower indicating we could see a bit lower prices ahead.

Support Levels To Be Aware Of:

2675 and 2620 are light support.

There is good support at the 2550 level.

The S&P has light support at 2480. It also has light support at 2450 and 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 as a drop to this level would be almost 15%.

 Stock Market Outlook for Tomorrow – Thu Jan 11 2018

Technical indicators are still very positive. The bearishness on Wednesday did nothing to alleviate the rally. The market is still quite overbought but as we saw on Wednesday, buyers are waiting on the sidelines for any chance to get into stocks at lower prices.

Thursday looks more bullish than Wednesday did. We should see a better open, then some weakness could develop but overall the day looks like we should close positive.

 Market Direction Internal Links

Profiting From Understanding Market Direction (Articles Index)

How I Use Market Timing

How I Use Market Timing

Understanding Short-Term Signals

Various Market Timing Systems

Market Direction Portfolio Trades (Members)

Market Direction External Links

Market Direction

IWM ETF Russell 2000 Fund Info

Market Direction SPY ETF 500 Fund Info