On Wednesday stocks recovered their footing quickly following word of President Trump’s offer to provide stimulus measures for the airlines and unemployed. Investors decided on Wednesday that Tuesday’s sell-off was “an error” and bought back in on Wednesday believing that some form or size of stimulus will be coming. This pushed the SPX up 1.7% to close at 3419.
Stock Market Outlook Chart Comments At The Close on Wed Oct 7 2020
On Wednesday the index closed just back above both the 21 and 50 day moving averages. The closing candlestick was bullish for Thursday.
Three changes following the massive rally on Wednesday were the Upper Bollinger Band turned higher, the Lower Bollinger Band fell back below the 100 day and the 21 day moving average is turning back up.
The 200 day moving average is still climbing. There are still 6 up signals and 4 down signals. The SPX chart is continues to gain a stronger bullish stance
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and 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 Oct 1. On Wednesday the up signal was stronger.
- 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 is rising.
- 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.
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.
- 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.
- 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:
3600 is resistance
3500 is resistance
3450 is resistance
3400 is resistance
3375 is support
3300 is support
3275 is support
3200 is support
3150 is support
3050 is support
3000 is support
2975 is light support
2950 is light support
2900 is light support
Stock Market Outlook for Tomorrow – Thu Oct 8 2020
With emotions continuing to run high, Wednesday could see stocks open flat to either slightly higher or lower but the technical indicators continue to point to the market pushing higher again on Thursday.