Monday started the day with a steep sell-off worth the S&P down at 2965. But throughout the day the index continued to rise. Then a Fed announcement of their intention to begin buying corporate bonds juiced the market higher. By the end of the day the morning plunge was long gone. The Index closed at 3066 up 25 points in what was a very dramatic day of trading.
Stock Market Outlook Chart Comments At The Close on Mon Jun 15 2020
The S&P closed below the Upper Bollinger Band again on Monday but it closed slightly above the 21 day moving average.
The S&P is entering another Bollinger Bands Squeeze which could send the index lower. The rally back from the morning plunge still left the index below Thursday’s opening and below the close of 3190 on June 10.
The 100 day moving average is still just below the 200 day but may move above it on Tuesday.
There are still 3 major up signals in the chart (see below) but only the 21 and 50 day moving average are still climbing. The 200 and 100 are slipping.
Stock Market Outlook review of Mon Jun 15 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and turned positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Friday June 12. The down signal was stronger on Monday at the close of trading despite the recovery rally intraday.
- 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 is still negative but rising.
- 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 has a strong down signal for Tuesday.
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 rising.
- 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:
3200 is resistance
3150 is resistance
3050 is support
3000 is support
2975 is light support
2950 is light support
2900 is light support
2860 is light support
2840 is light support
2800 is good support
2725 is light support
2700 is light support and marked a drop of 20.4%.
2675 is light resistant
2650 is light support
2625 is light support
2600 is support
2550 is light support
2500 was good support and marked a correction of 26.3%
2344 is the next level of support and marks a 30.9% correction.
2191 was the market low on March 23
2100 is light support
2000 is good support and marks a drop of 1393 points for a 41% correction. Some analysts still believe the index will fall this low in the second half of 2020.
Stock Market Outlook for Tomorrow – Tue Jun 16 2020
At the close of trading on Monday, MACD confirmed its down signal. However the futures show the rally from late Monday, is probably going to be extended into Tuesday.
The Slow Stochastic still also has a down signal. The remaining technical indicators are split among those that are falling and those that are rising. Relative Strength Index (RSI) is an important indicator in this type of see-saw market and it is pointing higher for Tuesday.
Overall the technical indicators may not have as strong an influence on Tuesday. Instead the market may move higher on investor interest in buying stocks that sold off on Thursday and again on Monday morning.
We should see a choppy day of trading on Tuesday but the outlook is for a positive close. That means if MACD does not change its signal, we could see weakness develop on Wednesday or Thursday. For now though, Tuesday should end positive and up.
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