Mon Sep 10 2018 saw the S&P open higher and then spend the day in a sideways pattern that eventually ended with the index well off the day’s highs, but still positive. The decline in Apple Stock definitely hurt the markets on Monday as did low volume. However as you can see in the intraday chart for Monday below, the S&P spent the day trading around the 2880 level and by the close of the day it was just 4 points below the morning open. This was a very strong sideways day but it did help to build some momentum to the upside.
Stock Market Outlook Chart Comments At The Close on Mon Sep 10 2018
The S&P ended the day above the 21 day moving average. However the sideways pattern on Monday has left behind a bearish candlestick. This candlestick often signals a down day for the next day which could reach the 21 day moving average where the S&P bounced from on Friday.
All the major moving averages are still climbing which is bullish. The 21 day moving average is also rising.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and has reached a neutral signal.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thu Sep 6 2018. The down signal was stronger 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 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.
- 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 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 Levels To Be Aware Of:
2830 is light support
2795 is light support
2745 to 2750 is light support
2725 is light support.
2700 is support.
2675 is light support.
2650 is light support
2620 is light support
2600 is strong support.
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 as a drop to this level would be 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Tue Sep 11 2018
For Tue Sep 11 2018 the S&P looks like it will try to open higher but then could slip back lower. MACD is gaining momentum to the downside which could signal another test of the 21 day moving average and then another bounce attempt.
The closing candlestick from Monday is not always accurate but in 60% of the time, it is correct and the index slips for the next day.
Only two indicators are pointing to the possibility that the index could climb on Tuesday while the remaining 4 indicators are moving lower.
Overall Tuesday looks like it will close slightly negative but Wednesday could see the index try to push back and close positive. Trading volume however, needs to stop declining, for any kind of rally to gain traction to the upside.
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