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Stock Market Outlook for Thu Jan 18 2018 – Overbought But Higher

Jan 17, 2018 | Stock Market Outlook

Stock Market Outlook Overbought Bias Up

What Happened On Wed Jan 17 2018

All three indexes roared back after Tuesday’s big reversal and wiped out the prior day’s drop and moved to fresh new highs in all 3 indexes.

Every sector advanced on Wednesday and the Dow Index closed above 26,000 for the first time.


Closing Statistics for Wed Jan 17 2018

S&P 500 Index Close

The S&P index ended up 26.14 to 2802.56

Dow Jones Index Close

The Dow Jones ended up 322.79 to 26115.65

NASDAQ Index Close

The NASDAQ closed up 74.59 to 7298.28






Stock Market Outlook – Review of  Wed Jan 17 2018

Chart Comments At The Close:

Wednesday saw the S&P open higher than Tuesday’s close and then build on that early bounce. By the end of the day the index closed above 2800 and above the Upper Bollinger Band for the eighth time in 10 trading days. The close left behind a bullish candlestick for Thursday. All the major moving averages are rising which is also bullish. The Lower Bollinger Band is also beginning to turn higher, another bullish signal.

Stock Market Outlook review of Wed Jan 17 2018

Stock Market Outlook: Technical Indicators:

Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and rising.

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. That buy signal gained more strength on Wednesday.

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 rising.

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 still has a down signal in place.

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 also extremely overbought and rising.

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 rising to its highest reading since December 2016.


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 18 2018

The market continues to be extremely overbought but every dip is still being bought, no matter how small it is. That is keeping stocks elevated and the indexes pumped. With Tuesday’s drop, all but history, investors continue to pressure stocks higher.

Thursday could see some weakness possibly mid-morning, but overall the market presently is keeping the overbought condition in stride and looks set to try to close higher still.


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