Stock Market Outlook for Thu Sep 17 2020 – Bias Is Lower

Tuesday’s market reacted positively at the initial release of the Fed’s decision on interest rates and within 40 minutes of the announcement, the S&P was at its highest level of the day pushing above 3428. From there though sellers took over and all 3 indexes pulled back, closing in the red as investors turned from positive on the Fed news to negative. The S&P closed down on the day by 15 points to 3385. The loss of the rally may have set the market up for a weak day on Thursday. Let’s look at the technical indicators after the close of trading on Wednesday to see what they predict for Thursday.

Stock Market Outlook Chart Comments At The Close on Wed Sep 16 2020 

On Wednesday the loss of the rally left behind a bearish candlestick for Thursday.

Both the Lower Bollinger Band and Upper Bollinger Band are still turning sideways.

The 50, 100 and 200 day moving averages are still climbing. There are still 6 up signals and two down signal caused when the Lower Bollinger Band movied above the 100 day moving average back on July 27 and on Aug 31 above the 50 day. The SPX chart is still more bullish than bearish.

Stock Market Outlook review of Wed Sep 16 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is falling again.

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

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Sep 4. On Wednesday the down signal was weaker.

• 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 was 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 an up signal in place and is 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 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 also 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 and Resistance Levels To Be Aware Of:

3600 is resistance

3500 is resistance

3450 is resistance

3400 is resistance

3375 is resistance

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 Sep 17 2020 

For Thursday the technical indicators have shifted from rising, back to falling. Weakness following the Fed’s decision on interest rates and in particular comments of an extended period of zero to historically low-interest rates concerned investors. On Thursday the markets may open lower, attempt a bounce but close lower as well as the bias has shifted back to lower for Thursday.

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