Falling oil and the rising dollar were the main culprits behind the see-saw day on Tuesday for stocks. However investors are worried the market is not going to recover but instead move lower. Surveys show a rising sense that the bull market from 2009 is showing signs of weariness. Many fund managers are complaining that the market has no direction and no signs of making a true bottom.
For the contrarian investors, these are signals that perhaps a bottom is being put in place. It has never been the case where a bear market commences when the economy is expanding. Back in Feb 2018 surveys showed the same sentiment of concerns from large fund managers as the market appeared set to end the bull market from 2009.
Stock Market Outlook Chart Comments At The Close on Tue Nov 13 2018
The S&P index closed below the 200 day moving average again on Tuesday in what was a see-saw session. It left a bearish candlestick for Wednesday. However sometimes the candlestick we see for the end of the day on Tuesday, points to a bounce so we should anticipate there is the potential for bounce still in the market.
The 50 day moving average is still falling and should it cross over the 100 day, it will be another major sell signal.
All the other moving averages are falling except for the 21 day which is trying to turn back up. The SPX is struggling against 3 major sell signals. The chart is quite bearish.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and falling.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Mon Nov 5 2018. The up signal was weaker on Tuesday.
- 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 falling.
- 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 Wednesday.
- 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.
- 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 unchanged from Monday.
- 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 good support – this will be strong resistance
2860 was good support – this will be resistance
2830 was light support and will be light resistance
2795 is light resistance
2745 to 2750 are still light resistance
2725 is light support.
2700 is important support
2675 is light support
2650 is light support
2620 is light support
2600 is strong support and held the market up from the lowest pullback in the present correction
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 of 641 points as a drop to this level would be 21% and just 5% away from a bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Wed Nov 14 2018
There is little change in the outlook. The technical indicators are all pointing to the same outcome, lower but with the potential for a bounce first.
The most important thing for the S&P now is holding onto the 2700 level. On Tuesday it closed at 2722, just below the important 2725 valuation. A drop below 2700 would signal another move to probably retest 2600. For now however the outlook is that the index should attempt a bounce and then pullback. A break of 2700 is not being signaled by the technical indicators, but it could easily happen.
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