Tuesday saw another record close for the NASDAQ and the S&P rose to close above 3300 for the highest close since Feb 21.
Stock Market Outlook Chart Comments At The Close on Tue Aug 4 2020
The biggest change in the chart today is the drop in the Lower Bollinger Band back away from the 50 day. This could signal a move higher is coming in the index.
The index itself pushed the Upper Bollinger Band again on Tuesday.
The closing candlestick is bullish for Wednesday.
There are now 6 up signals and one down signal with the Lower Bollinger Band moving above the 100 day moving average.
The 21 and 50 day moving averages are climbing still further, which is readily seen in the chart. The 100 day is also climbing further above the 200 day.
The index is back to the standard form of the 21, 50, 100 and 200 day format which is typical of a bull market.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Monday Aug 3. On Tue Aug 4 the up signal was confirmed.
- 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 is rising and signaling overbought.
- 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 and is also signaling 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 rising and signaling overbought.
- 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 which indicates we may not see much higher prices on Wednesday.
- 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:
3300 is resistance
3275 is resistance
3200 is support
3150 is support
3050 is support
3000 is support
2975 is light support
2950 is light support
2900 is light support
2860 is light support
2840 is light support
2800 is good support
2725 is light support
2700 is light support and marked a drop of 20.4%.
2500 was good support and marked a correction of 26.3%
2191 was the market low on March 23
Stock Market Outlook for Tomorrow – Wed Aug 5 2020
With three indicators signaling overbought and the Moving Average Convergence / Divergence (MACD) indicator confirming the uptrend. Also of significance is the Lower Bollinger Band falling back away from the Bollinger Bands Squeeze that was underway. This could be a signal that there is still more upside ahead for the rally. Expect some dips on Wednesday as the index is overbought but the close will be positive.