Wednesday saw stock indexes spend much of the day in a sideways pattern, trying to climb higher. In the end the final hour saw stocks sell-off and close lower as fears of more covid19 cases weighed on investors. The S&P closed down 11 points to 3113.
Stock Market Outlook Chart Comments At The Close on Wed Jun 17 2020
The S&P closed below the Upper Bollinger Band again on Wednesday but stayed above the 21 day moving average, the entire day. The choppy trading on Wednesday left behind a bearish candlestick for Thursday.
The S&P is in another Bollinger Bands Squeeze which could send the index lower or higher. The Upper Bollinger Band is falling while the Lower Bollinger Band is rising which has the index in a squeeze.
The 100 day moving average is now at the 200 day in what has been a lengthy and slow climb. The 50 day is still climbing toward the 100 day.
There are still 3 major up signals in the chart (see below). The index is struggling to keep a bullish stance.
Stock Market Outlook review of Wed Jun 17 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative.
- 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 slightly stronger 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 still negative and 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 an up signal in place for Thursday.
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 falling.
- 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 falling.
- 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 resistance
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 Jun 18 2020
Wednesday’s late day sell-off could see a bounce attempt at the open or early morning on Thursday. It won’t last however as the technical indicators are decidedly negative for Thursday.
The sideways pattern was saw for much of Wednesday may be repeated again on Thursday.
By the end of the day, the S&P will be lower.
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