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Stock Market Outlook for Tue Feb 20 2024 – Unconfirmed Down Signal

Feb 20, 2024 | Stock Market Outlook

Stock Market Outlook Unconfirmed MACD Down SignalPrior Trading Day Summary:

On Friday investors couldn’t overcome the concern over Producer Price numbers (PPI) that came in higher than expected in January. Trading volume was low once again on New York with just 3.8 billion shares trading hands. 62% of all trades were to the downside and 59% of all stocks fell on Friday but the close managed to hold above 5000. The loss was 24 points with a close at 5005. For the week the SPX lost 21 points, making the first loss for a week since the first week of January.

The NASDAQ lost 130 points to close at 15,775. For the week the index was down 215 points. This was the first losing week since the NASDAQ lost 487 points the first week of January. Trading volume slipped to 5.2 billion which was the lowest level of the week. 59% of all volume was traded lower.

Let’s review Friday’s closing technical indicators to see what we should expect for the third week of February, a shortened week thanks to Monday’s holiday. Short weeks often are more bullish than bearish for stocks.

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Stock Market Outlook: SPX Closing Chart For Fri Feb 16 2024

The index fell on Friday but only slightly and it was still above the 5000 valuation. 5000 though is not support. The first level of support is down at 4875 and even it is light support.

The closing candlestick is bearish for Tuesday. It is signaling we could see some weakness during the third week of February.

The 21 day moving average is moving higher which is bullish. It is above 4925 on the SPX.

The 50 day moving average is rising and at 4800 which is bullish.

The 100 and 200 day moving averages are climbing which is bullish. The 200 day is at 4500 on the SPX which is bullish.

The Bollinger Bands are bearish to start the week. The Upper Bollinger Band is dipping back and the Lower Bollinger Band moved above the 50 day moving average on Friday. A Bollinger Bands Squeeze is likely this week as the two Bollinger Bands move closer together.

The S&P chart is still more bullish than bearish for Tuesday but there are signals to be aware of.

Stock Market Outlook review of Fri Feb 16 2024


Stock Market Outlook: Technical Indicators Review

Momentum: Momentum is falling 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 Tue Jan 23 2024. On Fri Feb 16 2024 the up signal was replaced with an unconfirmed down signal. The down signal is presently quite weak.

  • 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 falling and clinging to positive.

  • 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 and is overbought.

  • 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 falling and positive.

  • 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 positive. It is signaling a lower day should be expected 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.

Stock Market Outlook: Support and Resistance Levels

5075 is resistance
5050 is resistance
5025 is resistance
5010 is resistance
5000 is resistance
4990 is resistance
4975 is resistance
4950 is resistance
4925 is resistance
4915 is resistance
4900 is resistance
4875 is support
4850 is support
4825 is support
4815 is support
4800 is support
4780 is support
4750 is support
4720 is support
4700 is support


Stock Market Outlook for Tue Feb 20 2024 

The technical indicators are almost all either falling or pointing lower. The MACD (Moving Average Convergence / Divergence) technical indicator issued a new down signal on Friday at the close. The down signal though is quite weak and could easily turn around if stocks were to bounce again on Tuesday and Wednesday. For now the down signal is unconfirmed. The Bollinger Bands are preparing to enter another Bollinger Bands Squeeze this week which could send stocks higher or lower. At present there is no clear signal from the bands as to which way the index will move out of the Bollinger Bands Squeeze.

For Tuesday watch for dips but stay cautious until we get a clear signal either up or down. Inflation signals last week were disappointing and are pointing to interest rates staying higher for longer than analysts had expected. If that happens, an interest rate cut could be further off on the horizon, perhaps June or even as late as September.


Potential Economic and Political Market Moving Events

The January FOMC minutes are out Wednesday afternoon at 2:00. On Thursday we get manufacturing PMI and existing home sales. These could move markets this week.

Monday:

Presidents Day Holiday

Tuesday:

10:00 Leading economic indicators are expected to dip to -0.3% from -0.1%.






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