Stock Market Outlook for Tue Aug 4 2020 – Morning Dips Possible But Still Higher

Monday saw a record close for the NASDAQ and the S&P reach the 3300 level although it closed just below it at 3294.

Stock Market Outlook Chart Comments At The Close on Fri Jul 31 2020 

The index pushed the Upper Bollinger Band on Monday but the Bollinger Bands Squeeze continues. The Lower Bollinger Band is almost ready to move above the 50 day which would be bearish if it occurs.

The closing candlestick though is often a reversal, meaning a down day or a down morning could follow Monday’s close.

There are now 6 up signals and one down signal with the Lower Bollinger Band moving above the 100 day moving average.

The 21 and 50 day moving averages are climbing still further, which is readily seen in the chart. The 100 day is also climbing further above the 200 day.

The index is back to the standard form of the 21, 50, 100 and 200 day format which is typical of a bull market but the chart looks like it could slip if the Bollinger Bands Squeeze tightens further.

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is back rising.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Wednesday July 8. On Tue Jul 28 2020 MACD issued an unconfirmed up signal on Monday. This negates the unconfirmed down signal from last week.

• 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 is trending sideways.

• 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 slightly indicating a small chance of changes in prices for Tuesday.

• 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:

3275 is resistance

3200 is still resistance

3150 is support

3050 is support

3000 is support

2975 is light support

2950 is light support

2900 is light support

2860 is light support

2840 is light support

2800 is good support

2725 is light support

2700 is light support and marked a drop of 20.4%.

2500 was good support and marked a correction of 26.3%

2191 was the market low on March 23

2100 is light support

2000 is good support and marks a 41% correction from the all-time high. Some analysts still believe the index will fall this low in the second half of 2020.

 Stock Market Outlook for Tomorrow – Tue Aug 4 2020 

For Tuesday the close on Monday indicates we could see some weakness in the morning but if there is any, it will bring in buyers.

The outlook continues to point to the index climbing still higher and breaking through 3300.

On Tuesday we should see more attempts to break 3300 and a probable close above it.

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