Tuesday saw the overbought market sell lower. The close was somewhat disappointing. In the final 5 minutes of the day selling erupted sending the index down to close at the 2900 level.
Stock Market Outlook Chart Comments At The Close on Tue Aug 20 2019
The SPX chart was more bullish on Monday than it is Tuesday night.
The sell signal from Aug 16 is stronger and the Bollinger Bands are continuing to fall back suggesting more downside lies ahead.
The closing candlestick on Tuesday was strongly bearish for Wednesday.
The 21 day moving average continues to fall and the 50 day is also starting to turn lower. he 100 day moving average is dipping away from the 2900. Only the 200 day moving average is still climbing.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling but positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thursday July 18. The down signal was weaker again on Tuesday.
- 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 negative.
- 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 signal 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.
- 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.
- 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:
3000 is resistance
2960 is light resistance
2900 is light resistance
2860 is light support
2840 is 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.
Stock Market Outlook for Tomorrow – Wed Aug 21 2019
Monday after the close, the technical indicators had turned decidedly bullish. Tuesday after the close, almost all had turned bearish again.
Not all indicators are bearish but enough to suggest Wednesday may end up being lower.
The key for Wednesday will be the Fed minutes released in the afternoon. If they show a dovish stance with support for further rate cuts the index will move higher. If not, the index will close flat to lower on Wednesday as the day is all about the Fed.