On Wednesday the index spent the morning practically sideways ahead of the Fed’s decision on interest rates.
At 2:00 PM the market initially dropped on the news of no rate cut. But within a minute buying recovered the drop as investors read that the Fed planned to be accommodative and would “be there” to support the expansion of the economy.
Fed Chair Powell indicated that some officials believe the case has strengthened for the central bank to ease policy which the majority of investors and analysts took to mean, July will see a rate cut.
Why the Fed refused to cut rates in June can only be guessed at. With high pressure for a rate cut in June it seemed more likely that the Fed wanted to prove that they are an independent body. Whatever the case the index closed higher on Wednesday and set the stage for a move still higher on Thursday on the belief a rate cut is coming next month.
The next potential market moving event will be the G20 summit meeting being President Trump and President Xi.
Stock Market Outlook Chart Comments At The Close on Wed Jun 19 2019
The index closed still higher on Wednesday and above the 2900 level for a second day. The closing candlestick was bullish for Thursday.
The upper Bollinger Band and the Lower Bollinger Band are both moving away from each other. This normally indicates a larger move higher should be expected.
There is still one sell signal in play but the 21 day is still turning higher and should it move above the 50 day, which looks likely for next week, it will negate that sell signal.
Aside from the one sell signal, the chart is very bullish with the major moving averages climbing higher. The 200 day is nearing the 2800 level. A move above it will be bullish for the rally.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and still falling. This is indicating that the push to the all-time high does not have a lot of strength. That means we could see a dip and a negative day or two, shortly.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Thursday June 6. The up signal was 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 signal is back positive and rising.
- 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 signal has an up signal in place. The technical indicator is showing the market as 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 and it is overbought.
- 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 back rising indicating higher prices should be expected.
- 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:
2950 is resistance
2900 is resistance
2860 is light support
2830 is light support
2800 is strong support
2795 is light support
2745 to 2750 is light support
2725 is light support
2700 is light support
2675 is light support
2650 is support
2625 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.
Stock Market Outlook for Tomorrow – Thu Jun 20 2019
The technical indicators are gaining strength except for momentum. That means we will see a higher close on Thursday but there will be dips and trading will be choppy.