Monday saw stocks move in a tight trading range and dips were pronounced at times. Sellers are everywhere and as the index keeps climbing, more sellers are taking profits and moving aside. All 3 indexes are now battling through sellers to push higher. We will continue to see this struggle continue Tuesday.
Stock Market Outlook Chart Comments At The Close on Mon Mar 18 2019
There are now 4 up signals in place on the SPX. The closing candlestick on Monday is bullish for Tuesday.
The index also closed above the 21 day moving average for the sixth day.
The 100 day is now above the 200 day moving average and the 50 day looks set to move above the 200 day this week.
The Bollinger Bands Squeeze is now underway which looks set to send stocks higher.
Stock Market Outlook review of Mon Mar 18 2019
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and rising.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thursday February 28 2019. The sell signal was almost gone on Monday at the close with a signal os just -0.21
- 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 but falling back as the index faces stronger selling creating tighter trading ranges and more dips.
- 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 up signal in place 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 also rising.
- 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 Resistance Levels To Be Aware Of:
2900 was support – this will be strong resistance
2860 was support – this will be resistance
2830 was light support and will be light resistance
2800 is strong resistance and may become support shortly.
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.
2300 has the most support at present but would represent a full correction of 641 points as a drop to this level would be 21% and just 5% away from a full bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Tue Mar 19 2019
The technical indicators are bullish for again for Tuesday although we have the Fed’s decision on interest rates coming up on Wednesday. The market is overwhelmingly prepared for no interest rate hike. With February jobs numbers of just 20,000 the Fed may find it impossible to raise rates. Many investors are looking for direction well beyond March. Many are hoping for a statement on the year. I don’t think that will occur but I doubt there will be an interest rate hike.
The market may stay more sideways as it battles its way higher, as investors hold back until Wednesday’s interest rate decision.
Dips will occur again on Tuesday and could be a bit deeper than we saw on Monday. Overall the indexes should close still higher on Tuesday.
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