By the close of trading on Wednesday the final hour had proved the best part of the day for the bulls. Volume picked up and more stocks joined in a one hour rally that ended at the highs of the day and basically returned the S&P back to where it had ended the day on Monday.
Stock Market Outlook Chart Comments At The Close on Wed Oct 23 2019
The SPX chart is still bullish and back above 3000, but just barely.
The closing candlestick is bullish for Thursday.
All the major moving averages are still climbing but the 21 day moving average is is still having trouble climbing. We need to watch it in case it falls below the 50 day which would be a sell signal. You can see in the chart below that the 21 day moving average has not recovered the level it was trading at in mid to late September. This is bearish.
The Bollinger Bands are still moving parallel indicating no real change in direction is expected as the index remains stuck sideways.
The two buy signals from September are still in place.
Stock Market Outlook review of Wed Oct 23 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 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
- 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 weak 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 moving sideways
- 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 indicating prices should rise.
- 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:
3000 is resistance
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
2675 is light support
2650 is support
2625 is light support
2600 is support.
Stock Market Outlook for Tomorrow – Thu Oct 24 2019
For Thursday the technical indicators are primarily pointing sideways but there are no down signals. Perhaps most important is the weak up signal from the Slow Stochastic and the rising rate of change signal, which points to higher prices ahead.
The S&P is still within a handful of points of making a new high but still cannot find enough volume and buyers to break through move higher above 3000.
However on Thursday we should see the S&P recover to at least the morning highs from Tuesday of around the 3014 level. The outlook, as the technical indicators point out is primarily sideways but the bias is still up.
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