Stock Market Outlook for Thu Jul 2 2020 – All About The Jobs Numbers, But Overall Higher

Stock Market Outlook - All About The Jobs

The first day of July saw further gains in the S&P and NASDAQ but a decline in the Dow Jones. The NASDAQ made another new all-time high on Wednesday. The S&P closed up 15 points to 3115 and is now 8% below the all-time high of 3393 made February 19. On Thursday we get the June Non-Farm Payroll Numbers at 8:30 AM.

Stock Market Outlook Chart Comments At The Close on Wed Jul 1 2020 

The index closed just above the 21 day moving average on Wednesday. However much of the volume was to the downside which caused a neutral candlestick at the close of trading on Wednesday.

The index is still in a Bollinger Bands Squeeze but with no clear signal either up or down as the index comes out of the squeeze.

There are now 6 up signals and no down signals in the chart.

The index is back to the standard form of the 21, 50, 100 and 200 day format which is typical of a bull market.  The market still has to retake the 3200 level and push higher to confirm whether this is a rally to a new high or just another rally in a sideways market stuck in a trading range.

Stock Market Outlook review of Wed Jul 1 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising slightly.

  • Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Friday June 12. The down signal was weaker 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 is rising and positive.

  • 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 strong up signal in place.

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 falling slightly indicating investors shouldn’t expect prices to rise on Thursday.

  • 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:

3200 is resistance

3150 is support

3050 is support

3000 is support

2975 is light support

2950 is light support

2900 is light support

2860 is light support

2840 is light support

2800 is good support

2725 is light support

2700 is light support and marked a drop of 20.4%.

2675 is light resistant

2650 is light support

2625 is light support

2600 is support

2550 is light support

2500 was good support and marked a correction of 26.3%

2344 is the next level of support and marks a 30.9% correction.

2191 was the market low on March 23

2100 is light support

2000 is good support and marks a drop of 1393 points for a 41% correction. Some analysts still believe the index will fall this low in the second half of 2020.

 Stock Market Outlook for Tomorrow – Thu Jul 2 2020 

On Thursday July 2, before the open, the June non-farm payroll numbers are released. While a miss could cause the index to drop, there is no chance for a plunge in the index at the present time. Job numbers would have to be the most horrific to even have the index tumble below 3000 on Thursday and the chance the numbers will be shocking is pretty well nil. Economic indicators are pointing to job growth. While the media is staying focused on the growing number of COVID19 cases which is a concern, there are more regions that are opening than closing. This is probably the first unemployment report in some time that may have only a minimal impact on the market direction beyond one or two days. The uptrend at present is intact so any dip on Thursday is a chance to setup more trades. Don’t be surprised if there isn’t any dip on Thursday.

June’s ISM PMI (Manufacturing Purchasing Managers Index) jumped to 52.6 from 43.1 in May. More important though, it was well beyond forecasts of 49.5. Anything above 50 shows expansion. As well, the Price Paid Index rose to 51.3 from 40.8 (May) and. New Order Index rose to 42.1 from 31.8 (May). All signals from June are pointing to expansion as the economy is continuing to reopen.

The technical indicators at the close on Wednesday are biased to the upside with even the MACD sell signal, weakening further. For Thursday ahead of Friday’s holiday, the index will close higher.

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