Stock Market Outlook for Thu Jun 4 2020 – Morning Weakness Possible But Higher Close

Wednesday saw a very strong advance on all 3 indexes. The S&P is down just 8% from its all-time higher. The Dow Jones is above 26,000. The NASDAQ is down less than 2% from its all-time high. The bears who just weeks earlier were warning of a second collapse have for now, become silent.

Stock Market Outlook Chart Comments At The Close on Wed Jun 3 2020 

Another major up signal on Wednesday with the 21 day moving average climbing above the 200 day.  This was the first move back up since the 21 day fell below the 200 day on March 13.

The closing candlestick on Tuesday was once more at the Upper Bollinger Band and is bullish for Thursday.

The index now has 3 major up signals in place.

The Lower Bollinger Band is falling lower and the 50 day moving average is above the Lower Bollinger Band, another bullish signal. The Upper Bollinger Band is continuing to rise along with the index.

The S&P closed above the 200 day moving average for the tenth trading day.

Stock Market Outlook review of Wed Jun 3 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum has turn back up and is 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 Tuesday May 19. 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 moving higher into overbought signals.

• 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 also rising indicating prices should be higher again on Thursday.

• 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:

3150 is resistance

3050 is support

3000 is 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 and most analysts believe this is the low point we will see.

2100 is light support

2000 is good support and marks a drop of 1393 points for a 41% correction. Some analysts believe the index will fall this low before the bear market ends.

 Stock Market Outlook for Tomorrow – Thu Jun 4 2020 

For Thursday all the indicators are rising and showing further strength. Three though are now into overbought signals,, two of them with strong overbought readings. This could mean some weakness on the morning for Thursday but the close should be higher.

On Thursday we also get the Weekly Initial Unemployment Insurance Claims ahead of Friday’s May jobs numbers. This could stall the rally a bit if the numbers are worse than expected, but if they are better than expected, the market could surge again.

No matter what happens Thursday morning, the close of trading, should see the S&P higher.

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