Stock Market Outlook for Thu Sep 6 2018 – Bounce Likely But Highly Suspect

Wednesday saw stocks move lower with a handful of stocks like Netflix, leading the overall market lower.

Stock Market Outlook Chart Comments At The Close on Wed Sep 5 2018 

The S&P closed below the Upper Bollinger Band on Wednesday. The index almost reached the 21 day moving average but not quite. Thursday could see the index slip down to the 21 day and then attempt a bounce. This first bounce though, would be quite suspect.

All the major moving averages are still climbing which is bullish. The 21 day moving average is also rising.

Stock Market Outlook review of Wed Sep 5 2018

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is positive and falling.

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

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Fri Aug 24 2018. The up signal continues but is far 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 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 down 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 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 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 Levels To Be Aware Of:

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 6 2018 

For Thu Sep 6 2018 the technical indicators are almost unchanged from Tuesday except the MACD indicator which is showing further weakness in the up signal.

While the indicators are not oversold there are some signals that advise the market could try a bounce on Thursday or Friday.

The first bounce though would be suspect and probably not hold. A second bounce should hold.

The markets are waiting for a bit of direction from the ongoing NAFTA trade talks, Chinese tariffs and on Friday, the non-farm payroll numbers.

Thursday should see a bounce attempt but it will not hold, yet. Remember, any goods news on any of the present issues should send stocks back higher.

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