Monday’s drop was highly anticipated but the losses overall were minor in relation to the early morning drop.
The S&P by the end of the day closed down just 1% at 2761. The NASDAQ was positive while the Dow Industrials was pulled down 328 points for a 1.4% loss but closed well off its low of the day.
Overall Monday tested investor resolve. Tuesday should be higher.
Stock Market Outlook Chart Comments At The Close on Mon Apr 13 2020
The SPX chart continues to be bearish with 6 sell signals in the chart. However the Bollinger Bands Squeeze which I discussed a number of times last week, showed that it intends to end with the Upper Bollinger Band rising and the Lower Bollinger Band falling. Which was the direction will be for stocks is not clear but a personal opinion is higher.
The 200 day moving average is now leading the market, which is typical in a bear market. It is followed by the 50 day and the 100 day. The 21 day is turning back up.
The closing candlestick on Monday is bearish but it also often signals a reversal which would mean another move up on Tuesday.
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 Thursday March 26. The up signal was strong again on Monday.
- 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 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 a weak up signal in place and is signaling 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 rising which could indicate higher prices are ahead.
- 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:
2900 is resistance
2860 is resistance
2840 is resistance
2800 is resistance
2700 is light support and marked a drop of 20.4%.
2675 is light resistant
2650 is light support
2625 is light support
2600 is support
2550 is light support
2500 was good support and marked a correction of 26.3%
2344 is the next level of support and marks a 30.9% correction.
2100 is light support
2000 is good support and marks a drop of 1393 points for a 41% correction. More analysts are jumping onto this level as where the correction is heading.
Stock Market Outlook for Tomorrow – Tue Apr 14 2020
For Tuesday the technical indicators are showing that Monday’s selling was met by buyers who stepped up and took advantage of some lower prices.
The outlook is for a choppy day and there could be some dips but overall the index will close higher.
The market continues to signal that the worst of the sell-off is behind investors. Without a new event to stun investors, the lows from late March will not be seen again in this bear market.
Tuesday will be higher by the close as the bias has shifted back to up.