Stock Market Outlook for Tue Sep 10 2019 – Overbought, Morning Weakness But Bias Still Up

Monday saw everything that was outlined last night in the Stock Market Outlook except for a higher close. Instead the index closed flat losing just 0.28 points and closing pretty well where it closed on Friday Sep 6.

During the day the index slipped to 2970 but failed to reach 2960. The big drags on the markets were particularly the credit card companies and some tech stocks on worries about government tech probes.

Despite all of this however, investors bought the dips and ended the day virtually unchanged.

Stock Market Outlook Chart Comments At The Close on Mon Sep 9 2019 

There were two events in the chart to be aware of. The first was the strengthening of the buy signal from Sep 5. Today the 21 day moving average moved higher. The 50 day moving average is at the 2950 valuation. A few more days of stocks remaining resilient and the 21 day could be above the 50 day for a second up signal. The other event is the bearish candlestick at the close today. This could signal some weakness on Tuesday, especially in the morning.

The 50 day moving average is still falling but the 100 day moving average and 200 day are back climbing.

The S&P chart still looks still better for Tuesday.

Stock Market Outlook review of Mon Sep 9 2019

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising and positive..

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Thurs Aug 29. The up signal was stronger 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 positive and 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 signal has a weakup signal in place and is very overbought which is a concern and could signal sideways action lies ahead for a few days.

• 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 and overbought.

• 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 which indicates price valuations on Tuesday may be 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 and Resistance Levels To Be Aware Of:

3000 is resistance

2960 is light resistance

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

2675 is light support

2650 is support

2625 is light support

2600 is support.

 Stock Market Outlook for Tomorrow – Tue Sep 10 2019 

The market is quite overbought and Monday’s action helped to reduce the overbought signals.

However for Tuesday we could see stocks slip at the open and try again to retest 2960. On Monday the drop to 2970 found buyers and the index rose and failed to fall that low again. Tuesday could see one more attempt to test 2960 and then a push higher in the afternoon.

I am expecting another sideways day with choppy trading, some weakness and a slightly higher close. Dips will be deeper on Tuesday but they are still opportunities to set up trades.

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