Stock Market Outlook for Thu Jul 9 2020 – Weakness With Bias Higher

Stock Market Outlook Bias Is Up

On Wednesday Jul 8, stocks moved as expected with a early morning bounce and then a dip down to 3137. That brought in some buyers who spent the day pushing sellers back. Once again we saw a sideways market from noon to 3:00 PM but then without any serious selling, investors bought again and sent stocks higher in the final hour of trading. The close was almost 3170.


Stock Market Outlook Chart Comments At The Close on Wed Jul 8 2020 

The index closed above the 21 day moving average again on Wednesday. The closing candlestick was bullish while at the same time, it also signals there is a chance for a dip in the morning on Thursday before the index climbs still higher.

The index is heading out of a Bollinger Bands Squeeze and signs continue to suggest the index will move higher 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.  Note as well the 21 day moving average is starting to dip a little which needs to be watched. For Thursday it is not a concern but if the Upper Bollinger Band starts to turn lower along with the 21 day, I will be buying some SPY put options for a down day or perhaps even two. But for now the index looks ready to push still higher after some morning weakness on Thursday.

Stock Market Outlook review of Wed Jul 8 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising again.

  • 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. On Wednesday the signal was an unconfirmed up signal.

  • 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 moving sideways, unchanged from Tuesday’s close.

  • 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 weak up signal in place and is once again very 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 falling and still negative which indicates lower prices are ahead.

  • 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 9 2020 

MACD issued an unconfirmed up signal on Wednesday. As well most of the technical indicators are back positive and climbing.

The closing candlestick is signaling there is a good chance the index will dip in the morning at close higher on Thursday.

Overall, the bias is still higher for the index.


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