Fed Chair Powell’s comments in his speech this evening indicates clear the Federal Reserve sees no reason to stop raising rates. Another rate is planned for December and more for the start of the following year.
While Wednesday saw markets pullback following a further decline in Apple Stock and bank stocks, Powell’s comments should see stocks stay under selling pressure on Thursday.
Stock Market Outlook Chart Comments At The Close on Wed Nov 14 2018
The S&P index closed below the 200 day moving average again on Wednesday in a choppy session that broke the 2700 level. It left a bearish candlestick for Thursday.
The 50 day moving average is still falling and should it cross over the 100 day, it will be another major sell signal.
All the other moving averages including the 21 day are falling. The SPX is struggling against 3 major sell signals.
As we the Upper Bollinger Band is turning back down. The chart is bearish.
Stock Market Outlook review of Wed Nov 14 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is negative and falling.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Mon Nov 5 2018. The up signal was weaker 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 falling.
- 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 for Thursday.
- 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 falling.
- 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 falling.
- 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:
2900 was good support – this will be strong resistance
2860 was good support – this will be resistance
2830 was light support and will be light resistance
2795 is light resistance
2745 to 2750 are light resistance
2725 is light support.
2700 is important support
2675 is light support
2650 is light support
2620 is light support
2600 is strong support and held the market up from the lowest pullback in the present correction
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 of 641 points as a drop to this level would be 21% and just 5% away from a bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Thu Nov 15 2018
There is still the possibility of a bounce attempt but it won’t hold for Thursday. The market is continuing to move lower.
At this stage in the correction the index needs a catalyst to send it back to the upside. At present there are none although anything positive on reduction of tariffs will be a boost. The Fed’s desire to continue to raise rates is continuing to pressure stocks lower with no end in sight for further rate increases. With little inflation on the horizon and with some evidence of economies world-wide slowing, a case can be made to slow future rate increases. However the speech by Fed Chair Powell this evening gave no indication of concerns and every indication that rates will move higher through 2019.
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