Monday saw all new intraday and closing highs again from all 3 indexes as investors continue to chase stocks higher. The market though is very overbought.
Stock Market Outlook Chart Comments At The Close on Mon Nov 18 2019
The SPX chart is bullish for Tuesday but very overbought. The closing candlestick on Monday was bullish for Tuesday.
3030 is light support. All the major moving averages are climbing including the 50 and 21 day moving averages. The 21 day moving average is still rising above the 3030 level which is bullish. The 50 day is above the 3000 level which is also bullish and is approaching the 3030 level. Normally a dip or a day or two of negative closes should occur as the 50 day approaching this support level.
The Lower Bollinger Band has moved above the 100 day moving average which is bullish.
The 100 and 200 day moving averages are still rising.
The two buy signals from September are still in place.
Overall the chart remains bullish but dips could be deeper on Tuesday.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and moving sideways.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Tue Oct 15 2019. The up signal was gaining strength again on Monday.
- 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 rising and moving back to signaling overbought.
- 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 is extremely overbought and has an up signal in place.
- 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 overbought and 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 signaling higher prices are ahead for the index.
- 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:
3100 is resistance
3030 in light support
3000 is support
2960 is light support
2950 was light support
2900 is light support
2860 is light support
2840 is support
2800 is strong support
2795 is light support
2745 to 2750 is light support
2725 is light support
2700 is light support
Stock Market Outlook for Tomorrow – Tue Nov 19 2019
The technical indicators are very overbought and dips are going to be deeper. There is a good chance for a negative close.
Despite all of this, the technical indicators are still rising and pointing higher for equities. The S&P has been up 4 days in a row but investors are still buying.
The S&P has a good chance of reaching 3200 before the end of November but there will be dips and some negative closes. Monday’s close saw just a slight gain on the day and the Relative Strength Index (RSI) was at a reading of 90 which is very overbought. It is rare for a reading that high to go much higher from here.
For Tuesday the technical indicators are showing some morning weakness should be expected but the close will be higher in what will be another choppy session. But it won’t be a surprise if the index closes slightly lower to work out some of the overbought condition. The chance of a weaker day on Tuesday is probably 50%.