Tue Apr 16 2019 continued to show us that the market is hanging on and slowly grinding higher. On Tuesday the S&P reached 2916 intraday, just 25 points from the all-time high. It closed up just one point, but the bias continues to hold to the upside.
Stock Market Outlook Chart Comments At The Close on Tue Apr 16 2019
The S&P closed above the 21 day moving average again on Tuesday but it left behind a bearish candlestick for Wednesday.
The Bollinger Bands Squeeze has ended with the index moving higher however note that the Lower Bollinger Band is not falling away but continues to suggest it could move back higher. This needs to be watched. As long as the Upper Bollinger Band also rises the market will be fine. However if the Upper Bollinger Band turns sideways or drops back and the Lower Bollinger Band continues to rise the S&P will enter a second Bollinger Bands Squeeze. Almost always a second Bollinger Bands Squeeze right after the first, is negative for stocks, so I will be reporting on this for the next several days.
All major moving averages are back where they belong and the 50 day and 100 day are both moving away from the 200 day.
The S&P is stronger but the candlesticks for the past 6 days are still indicating we are going to see a negative day shortly and with the Lower Bollinger Band rising, it confirms this outlook so be aware we could see a larger negative day this week.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and has turned sideways, basically unchanged.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Tuesday April 2. It is weaker on Tuesday by 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 is positive and it too has changed to sideways.
- 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 neutral signal in place and is very 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 also changed to sideways.
- 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 indicating lower prices are ahead of equities.
- 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 Resistance Levels To Be Aware Of:
2900 is strong resistance
2860 is light support
2830 is light 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.
There was good support at the 2550 level which is back to being support.
The 2500 level is support.
The S&P has light support at 2480 and better support at 2450.
There is 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 of 641 points as a drop to this level would be 21% and just 5% away from a full bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Wed Apr 17 2019
The outlook is unchanged from Tuesday. There will be dips again on Wednesday but stocks are hanging tough and the little dips are being bought and stocks are being sold on the small rallies.
The most important aspect of the past several days is that the index is not falling apart. Instead it is showing signs that it is preparing to advance to challenge the 52 week high.
Wednesday will see dips, but a higher close is once again expected.
Stock Market Outlook Archives