Monday saw investors remain on edge over global trade tensions as the 10 year bond yield fell lower, the yen rose to its highest value in over 18 months and the Chinese yuan slipped slightly lower. Talk of a recession and bear market spooked investors and stocks spent most of the day moving lower.
Stock Market Outlook Chart Comments At The Close on Mon Aug 12 2019
The SPX chart remains weak and the closing candlestick on Monday was bearish for Tuesday. The index closed below the 100 day moving average and looks ready to fall to the 200 day once again. The 21 day moving average is dropping quickly and could cross below the 50 day within a couple of days unless the market can have a few up days. A drop below the 50 day will issue a new sell signal on the market. The 50, 100 and 200 day moving averages are still rising. The Upper Bollinger Band is starting to turn lower which is bearish.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is negative and falling but there is still a strong oversold signal.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thursday July 18. The down signal was very strong again on Mondayy.
- 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 still 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 signal has an up signal in place for Tuesday.
- 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 and is oversold.
- 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:
3000 is resistance
2960 is light resistance
2900 is light support
2860 is better support
2830 is light support
2800 is strong support
2795 is light support
2745 to 2750 is light support
2725 is light support
2700 is light support
2675 is light support
2650 is support
2625 is light support
2600 is support.
Stock Market Outlook for Tomorrow – Tue Aug 13 2019
The technical indicators remain weak but the Slow Stochastic is still pointing to a potential move higher in the next couple of days.
The majority of signals though are negative and MACD has a very strong sell signal in place.
We should expect spikes higher on Tuesday but they will fail and the index will close lower for a second day this week. Wednesday though might change that although with MACD having such a strong sell signal, it will need a strong catalyst to send stocks back up at present.