Stock Market Outlook for Wed Jan 10 2018 – Overbought, Weakness Bias Still Up

Stock Market Outlook Overbought Still Up

What Happened On Tue Jan 9 2018

Markets on Tuesday continued their advance but the number of stocks participating continued to drop and there were signs of the overbought market showing weakness. All 3 indexes saw new all-time highs again on Tuesday.

Closing Statistics for Tue Jan 9 2018

S&P 500 Index Close

The S&P index ended up 3.58 to 2751.29

Dow Jones Index Close

The Dow Jones ended up 102.80 to 25,385.80

NASDAQ Index Close

The NASDAQ closed up 6.19 to 7,163.58

Stock Market Outlook – Review of Tue Jan 9 2018

Chart Comments At The Close:

The day n Tuesday saw the S&P move higher and stay above the Upper Bollinger Band. By the close however the rally had fizzled and the S&P ended at the Upper Bollinger Band. The closing candlestick is bearish to neutral in its outlook for Wed Jan 10 2018.

Meanwhile the Lower Bollinger Band continued to fall below the 50 day on Tuesday, a bearish sign. All the major moving averages are continuing to climb on Tuesday which is bullish.

Stock Market Outlook review of Tue Jan 9 2018

Stock Market Outlook: Technical Indicators:

Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and rising.

MACD Histogram: For MACD Histogram, I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9. MACD (Moving Averages Convergence / Divergence) issued a buy signal on Jan 4. The buy signal continued strong for Wednesday.

Ultimate Oscillator: 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. The Ultimate Oscillator signal is positive and falling. It is overbought.

Slow Stochastic: 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. The Slow Stochastic is extremely overbought and neutral for a second day.

Relative Strength Index: The relative strength index is set for a period of 5 which gives it 5 days of market movement to monitor.  It often is the first indicator to show an overbought or oversold signal.  The RSI signal is rising higher into overbought signals.

Rate of Change: 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.  The rate of change signal is positive and moving sideways indicating no real change in pricing is expected for the next couple of days.

Support Levels To Be Aware Of:

2675 and 2620 are light support.

There is good support at the 2550 level.

The S&P has light support at 2480. It also has light support at 2450 and good support at 2425. Below that there is some support at 2400, 2380, 2350. 2300 has the most support at present but would represent a full correction as a drop to this level would be almost 15%.

 Stock Market Outlook for Tomorrow – Wed Jan 10 2018

The technical indicators remain very positive ut are overbought and more are indicating a dip should be expected for either Wednesday or Thursday this week. We could see such a dip in the morning but overall the underlying trend is still up for stocks.

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