Monday’s market saw a lower open which immediately was snapped up by investors. Most of the day the S&P was in a tight trading range. By the close all major indexes were well off their lows.
Stock Market Outlook Chart Comments At The Close on Mon Jan 14 2019
The S&P chart is still bearish with 6 sell signals. Meanwhile the 50 and 100 day moving averages are starting to turn back up which could be an early signal for the bulls. The Upper Bollinger Band is falling and is now below the 200 and 100 day moving averages which is bearish. The closing candlestick is bearish for Tuesday.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and falling.
- 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 a bit weaker 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 is showing sideways and signaling 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 is neutral. It is also extremely 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 it too is 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 falling.
- 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 resistance
2650 is light resistance
2620 is light resistance
2600 is strong resistance.
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 Jan 15 2019
The dip on Monday was quickly snapped up by investors which tends to be a bullish signal. The technical indicators are losing strength as the S&P continues to not be able to push beyond 2600.
The Upper Bollinger Band falling below the 200 and 100 day moving averages is also bearish. The S&P looks like it has enough strength in the technical indicators to push higher on Tuesday, but if the 2600 level is not broken through, the index runs the risk of closing lower on Tuesday and lower again Wednesday. For now the outlook is higher for equities on Tuesday.
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