The opening plunge on Tuesday saw the indexes take the biggest one day beating since Oct 2, but a rally attempt in the afternoon cut those losses dramatically. The S&P ended the day below 3100 but recovered much of the drop which had taken it down to 3070.
Black Friday Special Ends Tonight (Dec 3) at Midnight EST
A reminder that the Black Friday special ends today Dec 3 at Midnight. As the sale was extended an extra day there will be no extensions after Tuesday. There will be a small price increase after the Black Friday sale ends. Here are all the details.
Stock Market Outlook Chart Comments At The Close on Tue Dec 3 2019
The SPX chart is still bullish, but the drop below the 21 day moving average today is a concern and could change the direction, even temporarily.
While the closing candlestick is bearish, it is also signaling a potential reversal could happen Wednesday or Thursday.
All the remaining signals are still bullish.
Light support has moved higher as of Friday’s close. It now sits at 3075.
All the major moving averages are still climbing including the 50 and 21 day moving averages. The 21 day moving average is still rising above the 3075 level which is bullish. The 50 day is above the 3030 level which is also bullish.
The Lower Bollinger Band has moved above the 50 day moving average which is bullish and is following the Upper Bollinger Band higher.
The 100 and 200 day moving averages are still rising.
A new development is the potential for a possible Bollinger Bands Squeeze starting to form. This needs to be watched but it is obvious in the chart that the Upper Bollinger Band is starting to fall.
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 Mon Dec 2 2019. Today the down signal was confirmed with a very strong -4.15 reading.
- 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 still falling rapidly.
- 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 is no longer overbought and has a strong signal in place for Wednesday .
- 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 and starting to show oversold readings. Any deeper readings and we should see a bounce develop.
- 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 may lie ahead.
- 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:
3150 is resistance
3075 is light support
3030 is light support
3000 is support
2960 is light support
2950 was light support
2900 is light support
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
Stock Market Outlook for Tomorrow – Wed Dec 4 2019
The technical indicators are now all turning lower. There are no indicators that are rising and pointing to higher prices.
MACD issued a confirmed down signal today as well.
The 3075 light resistance support held up today, but this is a light support level only and determined selling will break through it easily.
The morning plunge was partially recovered by the end of the day and there are signs that the index will try another bounce attempt on Wednesday, however with signals showing further downside ahead, any bounce attempt on Wednesday will probably end with another negative close. It will take more than a single day to recover from two days of selling. Wednesday could end either way but another bounce attempt appears likely. As long as the index holds above the 3070 level this week, the index should recover and continue the advance to new highs this month. So for Wednesday we just want to make sure the index holds above 3070.