The outlook for Monday was for a higher close but still below 2800. On Monday stocks got ahead of themselves thanks to investor enthusiasm. The afternoon saw the early morning gains given back but all 3 indexes still closed higher.
Stock Market Outlook Chart Comments At The Close on Mon Feb 25 2019
Not a lot of changes on Monday.
There are still 3 up signals in place and 6 down signals. The down signals will begin to be dropped as the moving averages recover to their correct positions with the 21 day on top and the 50 day leading the 100 and 200 day moving averages.
The index closed above the 200 day moving average but left behind a bearish candlestick for Tuesday.
The Lower Bollinger Band and the Upper Bollinger Band are still climbing indicating there is more upside ahead for the S&P.
The 2600 level has anchored the rally since January 14. The 2700 level has been held for the entire month of February. Both of these are bullish signs.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive but moving sideways.
- 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 weak again on Monday and could turn into a sell signal shortly.
- 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 falling.
- 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 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 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 moving sideways indicating not a lot of change is expected for prices over the next couple of days.
- 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 support
2725 is light support
2700 is light support
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 26 2019
There will be bigger dips on Tuesday in the indexes as sellers continue to pressure stocks at the 2800 level.
As well stocks are very overbought and have been for several weeks. The technical indicators are also signaling a sideways move is to be expected while buyers work to push through sellers at 2800.
Tuesday should end with the indexes slightly lower, but by the end of the week the indexes will be higher.
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