Stock Market Outlook for Tue Aug 14 2018 – Bounce Likely

Monday’s trading was still dominated by investors worried about the Turkey currency crisis. Stock indexes ended the day lower.

Stock Market Outlook Chart Comments At The Close on Mon Aug 13 2018 

The S&P ended the day at the 21 day moving average. This left a bearish candlestick for Tue Aug 14 2018 but often the index will bounce off the 21 day first.

All the major moving averages are still climbing but you can clearly see the Bollinger Bands Squeeze forming up and the 21 day is starting to turn sideways. The Bollinger Bands Squeeze at present is pointing to higher prices for the indexes coming out of the latest Bollinger Bands Squeeze but if the index falls further it will change to a down move out of the squeeze.

Stock Market Outlook review of Mon Aug 13 2018

Stock Market Outlook: Technical Indicators Review:

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 an up signal on Mon Aug 6 2018. On Monday MACD issued a sell signal that needs to be confirmed.

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 signal is negative and falling.

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 a down signal in place for Tuesday.

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 is often the first indicator to show an overbought or oversold signal.  The RSI signal is falling.

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. 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. The rate of change signal is moving lower.

Support Levels To Be Aware Of:

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 – Tue Aug 14 2018 

The technical indicators are are signaling more weakness but after two days of selling and all the indicators pointing lower, normally we should expect a bounce.

That bounce should come on Tuesday but it will be suspect, especially if MACD on Tuesday at the close confirms its new sell signal.

Tuesday then, we should see a bounce attempt in all the indexes.

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