The S&P on Mon Jul 15 2019 closed above 3000 for a second day. It was a slow day of trading with the index primarily stuck between 2014 and 2011 making for an extremely tight range for the index to be held in. I would not expect such a tight range again this week.
Stock Market Outlook Chart Comments At The Close on Mon Jul 15 2019
The index closed below the Upper Bollinger Band again but above all the major moving averages. The closing candlestick was bullish for Tuesday but often the candlestick is seen as a potential reversal which is the candlestick we saw last week on Thursday’s close. That means stay cautious and look for a chance for the index to slip back to retest 3000.
The Bollinger Bands are both moving higher with the Lower Bollinger Band now above the 100 day moving average. Often this indicates that the next move will be higher for the index. The Middle Bollinger Band or 21 day moving average is climbing higher daily.
The buy signal from June 28 with the 21 day moving above the 50 day, is still gaining strength.
The 200 day moving average is moving higher above the 2800 level which is bullish and the 100 day continues to move up.
The chart is bullish for Tuesday but the chance of a dip down to 3000 is still large.
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 Thursday June 6. The up signal was weaker on Monday and should be watched for any move lower.
- 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 positive and rising slightly.
- 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 signal has an up signal in place for Tuesday and is still showing the index as 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 moving higher into overbought readings.
- 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 and Resistance Levels To Be Aware Of:
3000 is resistance
2950 is light support
2900 is light support
2860 is better support
2830 is light support
2800 is strong support
2795 is light support
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.
Stock Market Outlook for Tomorrow – Tue Jul 16 2019
The chance that the S&P will continue its advance without retesting an important barrier like 3000 is extremely rare. Stay cautious and any dip down to 3000 would be a chance to setup further trades. The problem is that too many investors are waiting for such a dip. That means any dip may be shallow and not reach 3000 before buyers jump into stocks and push them higher.
Tuesday shows a mixed outlook from the indicators above. Most are bullish but there are signs that weakness remains and the index could slip back to 3000.
Whatever happens on Tuesday the close will still be above 3000 even if 3000 is revisited intraday.