Wednesday saw stocks open higher and push higher for the first half hour. That though brought in sellers and the S&P which had pushed to just above 2650, started a decline which gave back the entire rally and send the index negative. Intraday the S&P fell to 2612 before buyers started to become interested. By the close the index had recovered but was up just 6 points to close at 2638.70 for another close below 2650.
Stock Market Outlook Chart Comments At The Close on Wed Jan 23 2019
The S&P chart is still bearish with 6 sell signals. Meanwhile the 21 day moving average is rising but the 50 and 100 are back falling. The Upper Bollinger Band is turning back up and is above the 200 day moving average which is bullish.
However the index during the day broke down to the 50 day moving average and the close left behind a bearish candlestick for a second day.
Stock Market Outlook review of Wed Jan 23 2019
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and falling.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Fri Jan 4 2019. That up signal was weaker 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 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 has a down signal in place for Thursday and is still 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.
- 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 also 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 Resistance Levels To Be Aware Of:
2900 was support – this will be strong resistance
2860 was support – this will be resistance
2830 was light support and will be light resistance
2800 is strong resistance
2795 is light resistance
2745 to 2750 is light resistance
2725 is light resistance
2700 is resistance
2675 is light resistance
2650 is support
2620 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 Jan 24 2019
For Thursday, the technical indicators are once more showing signs that point to more weakness. The dip on Wednesday to 2612 sets up the index for a lower low during the past two days. That’s never the best of signs for the index.
Thursday looks weak again but there is always the chance for a move back above 2640 although it seems slim by the close on Wednesday. The S&P looks set to have another rocky, choppy trading session on Thursday that will end lower.
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