Monday saw the indexes push higher again with the S&P reaching 3197.71 in the morning before closing at 3191.45. This was another new intraday high and a new closing high as the index pushes to take 3200.
The enthusiasm on Monday was caused by more details of the “Phase One” of the China trade agreement and by home-builder sentiment reaching a 20 year high. This was the highest level since 1999 and precedes two bear markets. Analysts who had been calling for a slow-down in housing were stunned by the strength of stronger sales and a rise in buyer traffic.
The last bit of “good news” on Monday came from a survey by the Federal Reserve Bank of New York which showed the strongest rise in manufacturer orders since February for the state.
Stock Market Outlook Chart Comments At The Close on Mon Dec 16 2019
The SPX chart continues to be bullish and the Bollinger Bands Squeeze is beginning to end with signs pointing to a further rise in the index out of the squeeze.
The closing candlestick is bullish for Tuesday. We should remember though the closing candlestick on Friday pointed to a weak day coming up, so with Monday higher Tuesday could see some weakness.
Despite this all the moving averages are moving higher and light support has now added in the 3100 level.
Stock Market Outlook review of Mon Dec 16 2019
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 an up signal on Friday Dec 13. On Monday Dec 16, the up signal was confirmed.
- 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.
- 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 is overbought and has a strong 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 and signaling overbought.
- 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:
3200 is resistance
3100 is light support
3075 is light support
3030 is light support
3000 is support
2960 is light support
2950 was light support
2900 is light support
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
Stock Market Outlook for Tomorrow – Tue Dec 17 2019
All signals are pointing to a higher day on Tuesday. Only the closing candlestick on Friday warned that Monday or Tuesday might be lower. If that happens on Tuesday, it will be a chance to setup more trades as all the technical indicators are pointing to a higher market.
If there is some weakness shown on Tuesday, it most likely will be in the morning, but a higher close is expected for the day. The S&P should reach 3200 on Tuesday.
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