Stock Market Outlook for Thu May 16 2019 – More Weakness But Higher Close

Wednesday saw the S&P start the day with a dip back below the 100 day moving average. It was not however as deep as Monday’s dip and then emboldened investors. They jumped in and pushed stocks higher in what was a broad rally for a second day.

The S&P climbed 16 points to close at 2851 although it was, once again, higher in the late afternoon but then sold a bit lower into the close.  The drop on Monday was a total of 69 points. The past two days has seen the S&P recover 39 points for a bounce of 56%.

Stock Market Outlook Chart Comments At The Close on Wed May 15 2019 

On Wednesday the index fell below the 100 day moving average early in the day and then climbed back to reach the 50 day before closing back below the 50 day. This is the third closing in a row below the 50 day moving average.

The closing candlestick still points to this as being a bounce without much strength yet.

The lower Bollinger Bands is still falling as is the 21 day moving average,

The 50 day is beginning to weaken but the 100 and 200 day moving averages are still climbing.

The chart is bearish but is giving signals that it may turn sideways.

Stock Market Outlook review of May 15 2019

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is negative but also rising.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Wednesday May 1. On Wednesday the down signal was weaker than Tuesday.

• 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 rising and back 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 a down signal in place and is still oversold.

• 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 no longer oversold.

• 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.

• 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 light support

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 May 16 2019 

The technical indicators are mixed but still showing signs that the index might try to end the day positive yet again on Thursday.

At the same time, there are two strong sell or down signals from the technical indicators. Both MACD and the Slow Stochastic are signaling lower.

I had expected Wednesday to be more volatile with a positive close. Thursday looks like it could be more volatile than Wednesday but the close still looks like it will be higher.

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