Monday bank stocks came to life and closed up 3% as a sector.With banks due to begin reporting on Friday, investors suddenly seemed to notice that they have been lagging the rest of the market move higher. That changed today.
Stock Market Outlook Chart Comments At The Close on Mon Jul 9 2018
The S&P ended the day on Monday well above all the major moving averages and heading toward the Upper Bollinger Band.
This left behind a bullish candlestick for Tuesday.
The 21 day moving average is still falling but the 50, 100 and 200 day moving averages are rising.
The outlook continues to look bullish.
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and rising.
MACD Histogram: For MACD Histogram, I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9. MACD (Moving Averages Convergence / Divergence) issued a down signal on Jun 19. Today, Jul 9 MACD issued an unconfirmed up signal.
Ultimate Oscillator: 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. The Ultimate Oscillator signal is positive and rising.
Slow Stochastic: 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. The Slow Stochastic is signaling up for Tuesday and starting to reach toward being overbought.
Relative Strength Index: 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. The RSI signal is rising and into overbought readings.
Rate of Change: 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. The rate of change signal is positive and rising.
Support Levels To Be Aware Of:
2745 to 2750 is light support
2725 is light support.
2700 is support.
2675 is light support.
2650 is light support
2620 is light support
2600 is strong support.
There is good support at the 2550 level from where the market bounced back from the recent correction low on Feb 9.
The S&P has light support at 2480. It also has light support at 2450 and 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 as a drop to this level would be 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Tue Jul 10 2018
For Tuesday, the indexes may take a bit of a break in the morning after 3 straight days of solid and strong gains.
The technical indicators are all positive and a number are now signaling the market is starting to get overbought.
Tuesday should see the S&P open slightly higher and then fall back before climbing again as the morning progresses due to the market starting to become overbought. I am expecting a positive close for Tuesday but not nearly as large a move as the S&P has performed over the last 3 trading days.
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