With 2900 being broken quickly at the open on Tuesday, it was obvious that sellers would rush in. Many investors, perhaps even the majority (no actual surveys have been done), believe markets will retest the lows of this bear market and just as many doubt the rally. The move above 2900 saw heavier sell volume and a quick decline back below it. Whether this marks an interim top for the rally, we should know this week.
Stock Market Outlook Chart Comments At The Close on Tue Apr 28 2020
The SPX chart continues to be bearish with 6 sell signals in the chart. On Tuesday the index pushed to the 100 day moving average and fell back. This is bearish.
The 200 day moving average is still leading the market, which is typical in a bear market. It is followed by the 100 day and the 50 day. The 50 day is falling quickly. The 21 day is still turning back up and is above the 2725 valuation which is bullish. This break above 2725 set the index up to test the 2900 level which occurred on Tuesday.
The closing candlestick on Tuesday is bearish for Wednesday.
The Upper Bollinger Band is turning back up while the Lower Bollinger Band is turning sideways. We may not see a Bollinger Bands Squeeze unless the index slips back below 2800 tomorrow or Thursday.
Stock Market Outlook review of Tue Apr 28 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and hardly 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 Thursday March 26. The up signal was 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 falling and slightly positive.
- 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 weak up signal in the place for a third day.
- 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..
- 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 trying to rise.
- 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:
2900 is resistance
2860 is resistance
2840 is resistance
2800 is resistance
2725 is light support
2700 is light support and marked a drop of 20.4%.
2675 is light resistant
2650 is light support
2625 is light support
2600 is support
2550 is light support
2500 was good support and marked a correction of 26.3%
2344 is the next level of support and marks a 30.9% correction.
2191 was the market low on March 23 and most analysts believe this is the low point we will see.
2100 is light support
2000 is good support and marks a drop of 1393 points for a 41% correction. Some analysts believe the index will fall this low before the bear market ends.
Stock Market Outlook for Tomorrow – Wed Apr 29 2020
For Wednesday the technical indicators took a hit with the market falling back below 2900. While the index may try again on Wednesday to move higher, the technical indicators are losing strength and indicate that this phase of the rally may be starting to end or definitely slow. Weakness is developing and we should see more of that on Wednesday. The rally has been terrific and moved the index up 709 points from the March 23 low of 2191. A breather would not be unusual as we see the market move back to a period of some weakness.
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