With news before markets opened that trade talks with China were ongoing, the futures before the open reversed course from being down over 200 points on the Dow to being up 200 points. The open saw all 3 indexes jump.
By the close, the S&P had recovered not quite half of what was lost on Friday. There are signs though that the rally on Monday though could be just a bounce.
Stock Market Outlook Chart Comments At The Close on Tue Aug 27 2019
The potential of a Bollinger Bands Squeeze continued to develop on Tuesday as the Upper Bollinger Band is falling rapidly.
The 21 day moving average is almost below 2900 which means it will fall below the 100 day issuing a second sell signal.
The closing candlestick is bearish for Wednesday.
The 50 day moving average is still falling while the 100 day moving average which has been moving primarily sideways, is falling below the 2900 valuation. The 200 day moving average is still climbing.
Overall the index looks poor for Wednesday but there are still some signals that are bullish so there is a chance of another bounce attempt.
Stock Market Outlook – review of Tue Aug 27 2019
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative.
- 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. On Friday MACD was back to a sell signal. On Tuesday he sell signal continued.
- 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 negative and falling.
- 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 a down 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 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 28 2019
There are no up signals from the technical indicators for Wednesday. There are however some oversold signals which could mean another bounce attempt on Wednesday. But the signals also indicate that while we could see a bounce on Wednesday, the outlook remains lower for the present. For Wednesday we should watch for sideways action but be aware that the bias is lower. We could see a testing of 2860 again on Wednesday. A break of 2860 would quickly drop the index to 2850 where a bounce should be expected, even if just a small one.
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