Wednesday saw investors continue their buying although it was the Dow Jones Index that performed well, rising almost 160 points. The S&P came within 4 points of its all-time high and then backed off slightly but still ended the day higher. The S&P ended the day slightly lower as tech names, especially from China, remain under pressure.
The financial sector rose on Wednesday as the 10 year Treasury note rose and investors are back wondering if financial stocks might be a bit “too cheap”. The XLF ETF which follows the financial sector, ended the day up 1.7%. One small cap stock stole most of the attention on Wednesday. Tilray Stock (TLRY) was approved to import a marijuana product for testing with the University of California’s Center for Medicinal Cannabis Research to study the safety and efficacy of marijuana for a neurological disorder. The stock was halted several times intraday as it kept surging on the news, at one point being up 94%. The close say the stock up 38% for a jump of $59.08 to $214.06. Back on August 31 the stock was trading at $65.
Stock Market Outlook Chart Comments At The Close on Wed Sep 19 2018
The S&P ended the day below the Upper Bollinger Band and still above the 21 day moving average. The closing candlestick is bullish for Thursday although often this candlestick also points to a weak day coming within the next day or two. The 21 day moving average is continuing to climb and the index is staying above it which is bullish.
The Lower Bollinger Band continued above the 50 day moving average which is bearish at present but the Upper Bollinger Band may be about ready to turn back higher which would negate the move by the Lower Bollinger Band.
All the major moving averages are continuing to climb. Overall the chart looks bullish for Thursday.
Stock Market Outlook review of Wed Sep 19 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and rising.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thu Sep 6 2018. The down signal lost a lot of strength on Wednesday and heads into Thursday with the possibility that it could end the day only very slightly negative. We could be on the verge of a new up signal shortly.
- 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 but still 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 issued an up 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 rose higher on Wednesday.
- 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 unchanged for Thursday.
- 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 Levels To Be Aware Of:
2860 I light support
2830 is light support
2795 is light support
2745 to 2750 is light support
2725 is light support.
2700 is support.
2675 is light support.
2650 is light support
2620 is light support
2600 is strong support.
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 as a drop to this level would be 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Thu Sep 20 2018
There are not a lot of changes in the technical indicators for Thursday although there are signs that strength back to the upside is beginning to build.
MACD still has a down signal in place but it is greatly reduced. The Slow Stochastic changed to an up signal and momentum is back positive and climbing.
The rate of change singla is unchanged which means Thursday may not see a lot of price change by the close.
The outlook for the S&P is for a choppy day on Thursday but by the close, the markets will be higher, even if only slightly. The bias continues to point higher for the index.
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