Monday was expected to show some weakness, but a higher close was expected. Indeed the morning saw investors sell stocks lower in the first half hour but once selling dried up, investors noted that Friday’s low was not broken and that brought in buyers.
By the close on Monday the S&P was sitting at the day’s high, up 18 points to 2724.
Stock Market Outlook Chart Comments At The Close on Mon Feb 4 2019
The S&P is still bearish with 6 sell signals. There is also one up signal on Jan 31.
The closing candlestick on Monday was bullish for Tuesday however the index closed near the Upper Bollinger Band. Usually after a correction, a rise this high will see the index pushed lower before it rises again to challenge the Upper Bollinger Band. That means we should be prepared for the possibility of some weakness shortly.
The Lower Bollinger Band and the Upper Bollinger Band are turning higher indicating there is more upside ahead for the S&P.
The 21 day moving average is well above the 50 day moving average for a this day.
Stock Market Outlook review of Mon Feb 4 2019
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and was falling on Monday despite the S&P climbing higher. Normally this is a signal that we should expect weakness shortly.
- 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 strong again 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 rising and is moving back toward overbought.
- 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 for Tuesday is still 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 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 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 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 5 2019
The technical indicators are primarily rising but many are actually moving more sideways than higher. Momentum was falling on Monday even with the S&P climbing. This is a signal that we should be watching for some weakness perhaps as soon as Tuesday. As well, the S&P index bumped up against the Upper Bollinger Band. Normally this will be followed by the index slipping back for a day before rising again. This is another sign advising that we could see some weakness on Tuesday or Wednesday.
However even though the rally is overdone at this point, there are still strong signals in the index. Tuesday will see deeper dips or weakness periods, but a positive close still looks probable.
Stock Market Outlook Archives
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Stock Market Outlook For Fri May 1 2026 – Overbought But Higher
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