Monday started off with markets down deeply. By the close the 3 major indexes were positive and at their day’s highs. While Monday’s volume was light there are still signals from the charts that are worth paying attention to.
Stock Market Outlook Chart Comments At The Close on Mon Jul 2 2018
The S&P recovered the 100 and 50 day moving average on Monday.
The closing candlestick is bullish for Tuesday.
The 21 and 50 day moving averages are starting to turn lower while the 100 and 200 day are still climbing. The chart for Tuesday is bullish.
Stock Market Outlook review of Mon Jul 2 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative but continuing to rise.
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 a down signal on Jun 19. It was slightly weaker 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 negative 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 and is oversold enough for the market to move higher.
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.
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 neutral on the market direction.
Support Levels To Be Aware Of:
2745 to 2750 was 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 3 2018
I had expected Monday to be weak but instead, even on light volume, the market managed to stage a rally intraday and close positive.
The close on Monday set the stage for a chance to bounce still higher on Tuesday. Technical indicators are pointing higher and the Slow Stochastic has an up signal in place.
Overall the majority of the indicators are pointing to a higher close on Tuesday. It is a half day on Tuesday and usually half days end positive.
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