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Stock Market Outlook for Thu Jun 20 2024 – Choppy – Dip Possible But Still Up

Jun 20, 2024 | Stock Market Outlook

Stock Market Outlook choppy dips like but up

Prior Trading Day Summary:

On Tuesday (June 18) investors got the latest retail sales numbers which were slightly weaker than expected. coming in at 0.1% which was lower than estimates of 0.2% but better then the previous reading of minus 0.2%. Investors again took the numbers to mean the Fed would be cutting rates by more than once this year. However the number while lower than estimates, still was well above the prior numbers and when autos were removed the retails sales number for May was -0.1% the same as the prior reading. While certainly not as strong as estimates, the numbers still show the consumer is still buying and spending money.

By the close the S&P was up 14 points ending the day at a new record high of 5,487.

The NASDAQ also reached a new all-time closing high as it rose 5 points to close at 17,862.

Wed Jun 19 2024 was Juneteenth day holiday.

Let’s review the closing technical signals from  Tue Jun 18 2024 to see what to expect for Thu Jun 20 2024.


Stock Market Outlook: SPX Closing Chart For Tue Jun 18 2024

The index closed above the 21 day moving average and at the Upper Bollinger Band. This is bullish and signals overbought.

The closing candlestick is bullish for Thursday although it also indicates a choppy day is probable.

The 21 day moving average is still climbing continuing the latest up signal.

The 50 day moving average is climbing which is bullish.

The 200 day moving average is still climbing. The 200 day is at 4908 which is bullish and the 100 day is also climbing to 5130.

The Lower Bollinger Band is below the 50 day moving average and the Upper Bollinger Band is rising. The latest Bollinger Bands Squeeze is over with the SPX moving higher.

The S&P chart is bullish for Wednesday with a warning of choppy trading on Thursday from the closing candlestick.

SPX Stock Market Outlook review of Tue Jun 18 2024


Stock Market Outlook: Technical Indicators Review

Momentum: Momentum is rising and positive.

  • Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Thu Jun 6 2024. On Tue Jun 18 2024 the up signal was stronger. The MACD histogram gained strength.

  • 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 falling 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 an up signal in place and is 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 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 rising signaling that Thursday will end higher.

  • 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.

Stock Market Outlook: Support and Resistance Levels

5500 is resistance
5490 is resistance
5475 is resistance
5465 is resistance
5450 is resistance
5425 is resistance
5400 is resistance
5375 is resistance
5350 is resistance
5325 is resistance
5310 is resistance
5300 is resistance
5275 is support
5250 is light support
5225 is light support
5200 is good support
5190 is light support


Stock Market Outlook for Thu Jun 20 2024 

Despite the SPX sitting at an all-time high of 5487 and the closing technical indicators advising that the outlook is still higher, the market is steeply overbought and the majority of stocks are not participating in the rally. Dips are likely at any time as the market tries to work out the overbought condition. You can readily see in the technical indicators how overbought stocks are. The RSI for example is at 92.68, almost reaching 100. Stay cautious and watch for dips. Deep dips, should they occur are opportunities to setup trades.

Overall the SPX has a chance to close positive again on Thursday but at some point there will be some lower closings. More stocks need to get engaged in the rally to build strength to the upside. A narrow rally can push stocks to extremes but when they dip it can be deeper than many expect.


Potential Economic and Political Market Moving Events

The biggest economic events this week are retail sales on Tuesday and PMI numbers on Friday.

Monday:

8:30 Empire State manufacturing survey is expected to rise to -10.5 from -15.6 prior

Tuesday:

8:30 Retail sales are estimated to rise slightly to 0.2% from 0.0%

9:15 Industrial production is estimated to rise to 0.4% from 0.0%

9:15 Capacity utilization is estimated at 78.6% versus 78.4% prior

10:00 Business inventories are expected to rise to 0.3% from -0.1%

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims are expected to dip to 235,000 from 242,000 prior

8:30 Current Account for the second quarter is expected to increase to -$207.4 billion from -$194.8 billion prior

8:30 Housing starts are estimated at 1.38 million, up slightly from 1.36 million prior

8:30 Building permits are estimates to rise to 1.45 million, u slightly from 1.44 million

8:30 Philadelphia Fed manufacturing survey is estimated to rise to 5.0 from 4.5 prior






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