Stock Market Outlook for Wed Apr 1 2020 – Back to Lower

Stock Market Outlook Lower

On Tuesday stocks tried to stage a rally but failed and by the close all three indexes were lower. The S&P lost 42 points after trying to break through to 2650 and failing. It closed down at 2584. The NASDAQ closed down 74 points at 7700. It marked the end to the worst March on record for the indexes and for the S&P the worst single month since October 1987. For the quarter it was the worst quarterly decline since 2008. Historically the first day of April has been higher 72% of the time. The technical indicators though are not as bullish. Let’s take a look at Tuesday’s close.


Stock Market Outlook Chart Comments At The Close on Tue Mar 31 2020 

The SPX chart continues to be bearish and presents what looks like a classic bear market rally from last week. We will find out shortly, if the index slips back and breaks below 2500 and then fails to recover back above 2500. That will be the signal to prepare for more downside action in April.

There are now 4 sell signals on the market which are in the chart below in pink. All 4 signals continue to hold strength. Another down signal is building as the 50 day is falling toward the 200 day. If if falls below the 200 day, this will be a major sell signal because the 200 day will be leading all the moving averages. That becomes a classic bear market signal which means the bear market will last longer than a few more weeks.

All the moving averages are plunging but the 21 day is starting to show signs of trying to turn sideways while the Lower Bollinger Band is continuing to turn sideways. The Upper Bollinger Band is falling lower and on Tuesday it turned sharply lower. Note how the candlesticks are unable to break above the 21 day. This is classic bear market signals. Let’s hope the index can break above the 21 day. If it fails there will be more downside.

Tuesday’s closing candlestick is bearish for Wednesday.

Stock Market Outlook review of Tue Mar 31 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is falling but it is still above the red line in the technical chart. That line was resistance. We want to see momentum stay above that red line, otherwise there is more downside ahead.

  • 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 March 26. The up signal was stronger on Tuesday at the close.

  • 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 was is falling but also above what was resistance.

  • 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 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 falling but still above what was resistance.

  • 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 falling but still above resistance.

  • 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:

2700 is strong resistance and was a drop of 20.4%.

2675 is light resistant

2650 is resistance

2625 is light resistance

2600 is resistance

2550 is light resistance

2500 was good support and marked a correction of 26.3%

2344 is the next level of support and marks a 30.9% correction.

2100 is light support

2000 is good support and marks a drop of 1393 points for a 41% correction. More analysts are jumping onto this level as where the correction is heading.

 


 Stock Market Outlook for Tomorrow – Apr 1 2020 

In the technical indicator charts, some have a red arrow show past resistance. This is now support but weak support only. As long as the indicators can stay above or even at those red lines, the index has a chance to move back up. The problem is there has to be a reason for investors to pay more for stocks ad push them higher. At present there is little reason to pay more as stocks have already recovered some of their deeply oversold levels. Until there is a break in the coronavirus growth rate, investors are going to stay nervous.

Technically the 20 day moving average is important. The index has to break above it but for two days it has not been able to. That signals the potential for a larger move down coming. On Wednesday the outlook is back to lower and another negative close. Thursday could be worse.


Stock Market Outlook Archives

Overbought But Bullish
Monday saw stocks build on Friday’s close as investors continued to focus on the reopening of the economy and the positive impact they expect to ....... Read More
Morning Investing Strategy Notes
For FullyInformed Members here are my morning investing strategy notes for Jun 1 2020. The morning notes for today cover a number of subjects and ....... Read More
Stock Market Outlook Choppy Dips Higher
Friday saw stocks slip down and retest once again the 3000 level but then rallied in the final hour and close up 14 points at ....... Read More
Stock Market Outlook Weakness
Tonight’s stock market outlook is condensed as time was spent on a strategy article and a larger watch list to end the month with some ....... Read More
Morning Investing Strategy Notes
For FullyInformed Members here are my morning investing strategy notes for Fri May 29 2020. The morning notes for today cover a number of subjects ....... Read More
Morning Investing Strategy Notes
For FullyInformed Members here are my morning investing strategy notes for Thu May 28 2020. The morning notes for today cover a number of subjects ....... Read More
Overbought But Bullish
On Wednesday stocks extended the rally from Tuesday but this time there was no give back in the final hour. Instead stocks pushed through sellers ....... Read More
Morning Investing Strategy Notes
For FullyInformed Members here are my morning investing strategy notes for May 27 2020 The morning notes for today cover a number of subjects and ....... Read More