Stock Market Outlook for Thu Nov 7 2019 – Overbought and Sideways

Wed Nov 6 2019 saw the indexes try to push higher again but the news of a delay in the signing of a trade agreement with China, into December, sent the indexes lower midday. From there indexes fought their way back up and the S&P closed with a slight gain. Overall stock struggled on Wednesday.

Stock Market Outlook Chart Comments At The Close on Wed Nov 6 2019 

The SPX chart is bullish and closed above 3000 again on Wednesday and near all-time highs. The Upper Bollinger Band is rising and the Lower Bollinger Band is also rising. This is bullish for the first week of November.

The closing candlestick on Wednesday is bearish for Thursday as it continues to point to an overbought market.

A new support level is developing at the 3030 level which is from last week. Any dip back may try to test that level on Thursday or Friday. It would not be a concern to see that happen.

All the major moving averages are climbing including the 50 and 21 day moving averages. The 21 day moving average is now above the levels from late September which is bullish.

The two buy signals from September are still in place.

The Lower Bollinger Band is now above the 200 day moving average and climbing. This is also bullish.

Stock Market Outlook review of Wed Nov 6 2019

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is positive and moving sideways.

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

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Tue Oct 15 2019. The up signal was strong again 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 positive and moving sideways, signaling that the index is overbought.

• 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 is extremely overbought with a down signal 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 moving sideways 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 which often signals higher prices are ahead for equities.

• 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:

3100 is resistance

3030 in light support

3000 is support

2960 is light support

2950 was light support

2900 is light support

2860 is light support

2840 is support

2800 is strong support

2795 is light support

2745 to 2750 is light support

2725 is light support

2700 is light support

 Stock Market Outlook for Tomorrow – Thu Nov 7 2019 

Many of the technical indicators are still very overbought and two have turned sideways. MACD has lost a bit of strength to its up signal and the Slow Stochastic has a down signal for Thursday. However the Rate Of Change is climbing. Overall what we are seeing is an overbought market that is looking for a catalyst to continue the advance.

Thursday has a good chance to end the day slightly lower or flat. We should see some dips on Thursday but overall the outlook is sideways with little change in the index by the close.

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