On Wednesday the big news was the decision by the Federal Reserve to not increase interest rates. This was a move most analysts had predicted. The Fed did make it clear that another rate hike is expected before the year ends. Meanwhile the Fed plans to begin to reduce their balance sheet starting in October. It is rare when the Fed manages to contract their money supply without creating a recession, so this should be an interested endeavor on the Fed’s part.
S&P 500 Index Close
The S&P index ended up 1.59 to 2508.24
Dow Jones Index Close
The Dow Jones ended up 41.79 to 22,412.59
NASDAQ Index Close
The NASDAQ closed down 5.28 to 6456.04
Stock Market Outlook
Stock Market Outlook review of Sep 20 2017
Chart Comments At The Close:
The S&P on Wednesday climbed slightly higher but by the close it left behind a bearish candlestick.
Meanwhile the 21 day moving average has moved well above the 50 day simple moving average (SMA) which negates the original sell signal from the start of September when the 21 day fell below the 50 day.
The 100 and 200 day moving averages are continuing to climb and the Lower Bollinger Band is turning up which signals there is more upside ahead.
Stock Market Outlook: Technical Indicators:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and moving sideways.
MACD Histogram: For MACD Histogram, I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9. MACD (Moving Averages Convergence / Divergence) issued a buy signal on Aug 31. The buy signal was a bit weaker on Wednesday.
Ultimate Oscillator: 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. The Ultimate Oscillator is positive and overbought.
Slow Stochastic: 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. The Slow Stochastic has an up signal in place for Thursday and is extremely overbought.
Relative Strength Index: The relative strength index is set for a period of 5 which gives it 5 days of market movement to monitor. It often is the first indicator to show an overbought or oversold signal. The RSI signal is higher and into overbought readings. It is continuing to rise.
Rate of Change: 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. The rate of change signal is positive but moving sideways. Prices may change shortly.
Support Levels To Be Aware Of:
The market has light support at 2450 and good support at 2425. There is also light support at 2400, 2380, 2350 and 2300.
Stock Market Outlook for Tomorrow – Thu Sep 21 2017
For Thursday the technical indicators are pointing to an overbought market that will at some point dip back to work out the overbought condition. At present though the market still looks like it has enough strength to move higher. We are going to see more dips due to the overbought nature of the market but for Thursday I am expecting the market to continue to hold an up bias.
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