Monday saw the Dow made a third straight day of gains but the S&P and NASDAQ both dip slightly lower.
Stock Market Outlook Chart Comments At The Close on Mon Jul 16 2018
The S&P ended the day on Monday just below 2800.
All the major moving averages are rising with the 50 day continuing to quickly rise.
The closing candlestick on Monday was neutral on the outlook for Tuesday.
The Bollinger Bands are also moving higher.
The chart is showing some weakness but overall the chart is bullish.
Stock Market Outlook Review of Jul 16 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and turning sideways.
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 an up signal on July 9. The up signal was stronger on Monday.
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 but falling.
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 extremely overbought and has an up signal in place for Tuesday.
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 turning sideways and is overbought.
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 but continuing to move sideways rather than climbing or falling.
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 17 2018
The technical indicators are primarily pointing sideways for Tuesday which means we shouldn’t expect much in the way of a higher day. Instead the day appears set for more weakness and a lower close.
The underlying trend however is still above 2800 for the S&P. While on Tuesday the index will close below 2800, by the end of the week, it should be above it.
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