Monday saw stocks hold their ground despite a number of attempts by sellers to push them lower.
This evening, news of a potential deal to insure there is no government shutdown has the futures higher to start the day on Tuesday.
Stock Market Outlook Chart Comments At The Close on Mon Feb 11 2019
The S&P is still bearish with 6 sell signals.
There is still 1 up signal as of Jan 31 when the 21 day rose above the 50 day. The 21 day is continuing to advance and as long as the index doesn’t dip back below 2650, the 21 day should cross above the 100 day and then 200 day probably by the end of the week. Remember, any positive news on trade with China will shoot stocks higher.
The 200 and 100 day moving averages are not changing and both are continuing to slowly fall. The 50 day is rising.
On Monday the index closed back above the 200 day moving average which left a bullish candlestick for Tuesday, although it is also a typical weakness signal from this candlestick as well.
The Lower Bollinger Band and the Upper Bollinger Band are turning higher indicating there is more upside ahead for the S&P.
The chart is still predominantly bearish which is why caution is still worth observing.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and 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 Fri Jan 4 2019. That up signal was weaker still 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 was sideways on Monday.
- 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 down signal in place for Tuesday and is still overbought. This is bearish.
- 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 back 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 falling indicating more weakness should be expected. This is bearish.
- 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 support – this will be strong resistance
2860 was support – this will be resistance
2830 was light support and will be light resistance
2800 is strong resistance
2795 is light resistance
2745 to 2750 is light resistance
2725 is light resistance
2700 is still resistance
2675 is light support
2650 is support
2625 is light support
2600 is support.
There was good support at the 2550 level which is back to being support.
The 2500 level is support.
The S&P has light support at 2480 and better support at 2450.
There is 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 full bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Tue Feb 12 2019
The technical indicators are predominantly still bearish and of particular concern is MACD which is ready to turn negative and give a sell signal unless the S&P can rise for a couple of days at least.
Tuesday though should see stocks close higher on the news of a potential “deal” among both political groups to insure there is no government shutdown at the end of this week. Any indication that the deal won’t hold will send the index back down.
The outlook for Tuesday then is for weakness to continue, but for the S&P to end higher.
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