Stock Market Outlook for Thu Jul 5 2018 – Weakness and Lower

Tuesday July 3 was a half day ahead of the July 4th holiday. The day though did not go as predicted. I had expected a slightly higher close and at the open this looked possible. However a drop in Micron Technology Stock (MU) shook the market as it was caused by a ruling from a Chinese court which many investors took as a possible start to retaliatory repercussions of the ongoing tariff trade “wars”. This sent stocks lower into the close of the shortened day. It also ended the day with losses for all three indexes.

Stock Market Outlook Chart Comments At The Close on Tues July 3 2018 

The S&P ended the day on Tuesday just above the 100 day moving average but below the 50 day moving average.

The closing candlestick was bearish for Thursday.

During the day the index reached the 100 day and then moved above it which is somewhat bullish for Thursday.

The 21 day moving average is falling and the 50 day is starting to turn lower. This is bearish. The 100 and 200 day moving averages are both still climbing which is bullish.

Stock Market Outlook review of Wed Jul 4 2018

Stock Market Outlook: Technical Indicators Review:

Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative but continuing to rise.

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 a down signal on Jun 19. It was slightly weaker on Tuesday.

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 negative and falling.

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 signaling up and is oversold enough for the market to move higher.

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 is often the first indicator to show an overbought or oversold signal.  The RSI signal is 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. 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. The rate of change signal is negative and falling, signaling lower prices are expected.

Support Levels To Be Aware Of:

2745 to 2750 was light support

2725 is light support.

2700 is support.

2675 is light support.

2650 is light support

2620 is light support

2600 is strong support.

There is good support at the 2550 level from where the market bounced back from the recent correction low on Feb 9.

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 20% and just 5% away from a potential bear market signal.

 Stock Market Outlook for Tomorrow – Thu Jul 5 2018 

For Thursday, the chart index is more bearish than bullish with a bearish candlestick to start trading on Thursday.

The technical indicators are split, but only one is point higher, the Slow Stochastic.

All the other indicators are pointing lower or have outright sell signals such as MACD.

The outlook is for the index to try to move higher at the open and then fall lower. The end of day on Thursday is expected to be lower.

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