Monday saw one of those dramatic recovery days, with the markets plunging near the open and then mid-morning commencing a recovery rally. By the close on Monday’s stocks had recovered all the day’s losses and all 3 major indexes had closed positive.
Let’s review the close on Mon Dec 10 2018 and the outlook for Tue Dec 11 2018.
Stock Market Outlook Chart Comments At The Close on Mon Dec 10 2018
The S&P chart remains bearish. The correction made a new low today, breaking through the 2600 level but then bouncing back above it.
By the close the index had recovered all the day’s losses and closed up slightly. This left behind a candlestick pointing to the potential of a bounce.
There are still 4 strong selling signals in the S&P which are seen in the chart below.
On top of this the Lower Bollinger Band is tumbling lower and the 50 day moving average is almost ready to cross below the 200 day moving average for a 5th major sell signal.
The 21 day moving average is falling rapidly.
Only the closing candlestick is slightly bullish for Tuesday. All the other indicators are bearish.
Stock Market Outlook review of Mon Dec 10 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and trying to rise.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Wed Nov 28 2018. On Mon Dec 10 2018 MACD issued a new down signal. The last up signal was Nov 28 just 8 trading days ago caused by the change in tone of Fed Chair Powell.
- 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 rising slightly.
- 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 a strong down 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 moving sideways and oversold.
- 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 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 Resistance Levels To Be Aware Of:
2900 was good support – this will be strong resistance
2860 was good support – this will be resistance
2830 was light support and will be light resistance
2795 is light resistance
2745 to 2750 is light resistance
2725 is light resistance
2700 is resistance
2675 is light resistance
2650 is light resistance
2620 is light support
2600 is strong support and held the market up from the lowest pullback in the present correction.
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 of 641 points as a drop to this level would be 21% and just 5% away from a bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Tue Dec 11 2018
Monday’s rally was great to see especially considering how deep the plunge was in the early morning. The closing candlestick on Monday points to the potential for a bounce and considering there are oversold signals from at least two of the technical indicators, there is still a potential for a further bounce on Tuesday.
However, overall the rally did not change the underlying move lower. MACD issued a new down signal on Monday and the 50 day moving average is on the verge of falling below the 100 day which would be the fifth down signal for the S&P.
Tuesday still looks negative despite Monday’s rally, but fingers crossed, the index moves higher on Tuesday. That though could setup Wednesday to move back lower. Stay cautious and protected and keep capital levels elevated to be ready to take advantage of when the correction might end.
Stock Market Outlook Archives
Stock Market Outlook For Wed May 6 2026 – Choppy But Higher Still
Morning Investing Strategy Notes for Tue May 5 2026
Stock Market Outlook For Tue May 5 2026 – Overbought and Lower
Morning Investing Strategy Notes for Mon May 4 2026
Stock Market Outlook For Mon May 4 2026 – Dips Likely With Possible Lower Close
Morning Investing Strategy Notes for Fri May 1 2026
Stock Market Outlook For Fri May 1 2026 – Overbought But Higher
Morning Investing Strategy Notes for Thu Apr 30 2026
Stock Market Outlook For Thu Apr 30 2026 – Dips Likely Possible Lower Close
Morning Investing Strategy Notes for Wed Apr 29 2026
Stock Market Outlook For Wed Apr 29 2026 – Choppy But Higher Ahead Of More Earnings
Morning Investing Strategy Notes for Tue Apr 28 2026
