On Monday Sep 24 a number of political events caught investors attention and they used them as an excuse to take profits. As well news of an end to trade talks with China also concerned investors and on Wednesday investors get to watch another quarter point increase in interest rates. All of this assisted in sending stocks lower. However, aside from these events, the market’s technical indicators on Friday, had already pointed to Monday as being weak for the start of the final week of September. That meant when selling started, the market was already set to pullback so the extra selling just made the dip deeper than it probably would have been. The S&P slipped to 2912 but closed above it at 2919. The most damage was seen on the Dow while the NASDAQ closed slightly positive on the day.
Stock Market Outlook Chart Comments At The Close on Mon Sep 24 2018
The S&P came close to reaching the 21 day moving average which is at the 2900 level. It closed below the Upper Bollinger Band but above the 21 day moving average. This left behind a bearish candlestick for Tuesday.
The 21 day moving average is continuing to climb.
The Lower Bollinger Band continued above the 50 day moving average which is bearish at present and it is starting to move toward the Upper Bollinger Band which is beginning to form the start of a Bollinger Bands Squeeze.
All the major moving averages are continuing to climb. Overall the S&P chart still has a bullish outlook but there are some signs there could be a small pullback this week.
Stock Market Outlook review of Mon Sep 24 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive but 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 Thursday Sep 20. That signal was confirmed on Friday Sep 21 but today it was much weaker.
- 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 issued a down signal for Tuesday and is 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 moving lower.
- 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 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 Levels To Be Aware Of:
2860 is light support
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 25 2018
For Tuesday there are technical signs of weakness but nothing to suggest any major pullback.
Instead the technical signals are advising the market may drift sideways and keep a negative bias for a day or two longer.
The Fed’s decision on interest rates, set for Wednesday might be when investors will see the market give better clues as to its next move. Almost 100% of investors and analysts expect the Fed to raise interest rates another quarter of a point on Wednesday.
For Tuesday, expect a sideways day with choppy trading and a slight bias lower.
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