Stock Market Outlook for Thu Jun 21 2018 – Morning Weakness Possible But Higher Close

Stock Market Summary for Wed Jun 20 2018 

Wednesday saw buyers return to the markets and push stocks higher. While the Dow remained negative on the day, the S&P closed higher and the NASDAQ closed at a new record high.

Closing Statistics

The S&P rose 4.73 to 2767.32

The NASDAQ Composite rose 55.93 to 7781.52

The Dow Jones Industrial Average fell 42.41 to 24,657.80

Stock Market Outlook Chart Comments At The Close on Wed Jun 20 2018 

Stocks closed modestly higher on Wednesday, ending a 3 day falling streak. The 21 day moving average is continuing to lead the market high. It is followed by the 50 period, 100 period and 200 period moving averages, all of which are also rising.

The closing candlestick is often viewed as a neutral outlook for the following day. However I have repeated found this kind of closing candlestick is more bullish than bearish.

All the moving averages are climbing and the 50 day is moving ahead of the 100 and 00 day moving averages. The chart is mildly bullish.

Stock Market Outlook review of Wed Jun 20 2018

Stock Market Outlook: Technical Indicators Review:

Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative and falling.

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 which was confirmed today.

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 positive and trending sideways.

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 is signaling lower for the index.

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 rising.

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 falling.

Support Levels To Be Aware Of:

2745 to 2750 is 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 Jun 21 2018 

The market direction now has two confirmed down signals. Earlier the Slow Stochastic had issued a down signal. Today it was MACD confirming a down signal. When combined with momentum and rate of change, both of which are pointing lower, you would think the outlook would still be down. However the index bounced off the 21 day moving average on Wednesday and there are signs of a move up coming from the Ultimate Oscillator and Relative Strength Index (RSI).  The closing candlestick is also the type often seen before a move higher.

For Thursday I am expecting a weak morning but a higher close.

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