Tuesday saw investors sell the indexes lower. By midday the S&P had fallen to 2767 which finally brought in buyers. By the end of the day the S&P was down just 10.88 points to close at 2792.81. While the rally back was great to see, some technical damage was done on Monday. As well a lot of investors’ nerves were frayed as 2800 has remained a valuation most analysts have warned will be difficult for the market to move higher from without facing heavier selling.
Stock Market Outlook Chart Comments At The Close on Mon Mar 4 2019
Monday saw the S&P close below 2800 and intraday the index fell to the 21 day moving average.
The closing candlestick was bearish for Tuesday. The 100 day moving average is still not above the 200 day and the 50 day moving average is still trying to climb.
Meanwhile the Upper Bollinger Band is falling and the Lower Bollinger Band is rising in what could be a Bollinger Bands Squeeze for mid-week,. This could send stocks higher or lower, but if the squeeze occurs there will be a change in direction.
There are still 3 up signals in place and 6 down signals. The down signals will begin to be dropped as the moving averages recover to their correct positions with the 21 day on top and the 50 day leading the 100 and 200 day moving averages. The 100 day moving average is trading below the 200 day and could cross above it at any time. This would be a major up signal if it occurs.
The 2600 level has anchored the rally since January 14. The 2700 level has been held for the entire month of February. Both of these are bullish signs.
Today though the 2780 valuation was easily broken through and the index immediately collapsed to 2767 before buyers returned. This is a warning that further selling, should it intensify will easily send the S&P below 2760.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and was falling on Monday.
- 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. On Mon Mar 4 2019 that down or sell signal was confirmed with a stronger negative reading.
- 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 moving sideways.
- 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 down signal in place for Tuesday, helping to confirm the down signal from MACD. It is also 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 falling quickly.
- 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 indicating that prices will be moving lower.
- 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
2795 is light resistance
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 5 2019
On Monday by the close, MACD confirmed Thursday’s sell signal indicating investors should prepare for some selling, short-term.
For Tuesday, the technical indicators are moving lower. Only the Ultimate Oscillator is moving sideways, virtually unchanged from Friday. There are now two sell signals in place, one from MACD and one from the Slow Stochastic. Of the two down signals, MACD is the more important one as it is looking out more than a day or two, while the Slow Stochastic is looking out a couple of days but not further.
The Rate Of Change is warning that lower prices lie ahead for stocks. There are no technical indicators that are rising.
Tuesday will see the index trade in a choppy fashion but end the day lower.
Stock Market Outlook Archives