Monday saw low volume and a few dips, particularly in the NASDAQ but the Dow pushed higher and the S&P and NASDAQ followed. By the close all 3 indexes were higher and positive.
Stock Market Outlook Chart Comments At The Close on Mon Aug 20 2018
The S&P moved higher on Monday closing at the 2857 level. The closing candlestick is mildly bullish but often also represents weakness so be prepared for some dips on Tuesday.
All the major moving averages are still climbing and the Bollinger Bands Squeeze is turning higher and moving above the 50 day moving average which is bullish. The 21 day moving average is also turning higher.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and unchanged as it moves sideways.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Mon Aug 13 2018. The down signal was 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 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 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 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 21 2018
For Tuesday there are no changes in the technical indicators. MACD still has a down signal in place while all the other indicators are positive and rising. The Slow Stochastic is still holding an up signal. This means the rally should last more than tomorrow.
The closing candlestick though, points to some weakness developing in the markets. That means anticipate some dips for Tuesday. I will be using dips on Tuesday to setup further trades. The outlook is still higher for the S&P.
Stock Market Outlook Archives