Monday saw indexes build on Friday’s advance.
All 3 indexes closed higher and the drop of the prior week is almost forgotten.
However markets are very overbought and a dip should be expected.
Stock Market Outlook Chart Comments At The Close on Mon Aug 19 2019
Monday saw the index push above the 100 day moving average and close above it.
The candlestick is bullish but it also is often seen as a reversal as well. A dip on Tuesday might occur but the candlestick also advises that any dip will not end the upturn at present.
The 21 day moving average fell below the 50 day on Friday which issued a sell signal on Aug 16.
The 100 day moving average which had been trying to break above the 2900 valuation fell back and closed just below the 2900 day confirming a down move for the index.
The 200 day moving average is still moving higher and is, at present, holding the S&P up from a further decline.
The Upper Bollinger Band and Lower Bollinger Band are continuing to turn lower which is bearish.
Overall the index chart is more bearish than bullish.
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 a down signal on Thursday July 18. The down signal was considerably weaker 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 positive and 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.
- 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 rising.
- 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 also rising.
- 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 resistance
2860 is light support
2840 is 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 20 2019
Tuesday will see more choppy trading and probably bigger dips should be expected.
There are technical indicators that have changed to positive or have changed to “up” signals like the Slow Stochastic.
Overall the technical indicators are a bit more bullish. That means on Tuesday, while we could see the index slip, the rally up is still not yet over from last week’s downturn.
The market is very overbought which will result in dips. However dips are going to find eager buyers who missed out on the rally from Wednesday’s collapse and want to get into the rally. This could be a mistake on their part as the market may dip deeper as the week progresses. A lot will depend on the Fed Chair’s remarks on Friday.
For Tuesday the market will be sideways but with a slight bias up.