Stock Market Outlook for Wed Jan 16 2019 – Choppy, Dips Likely But Still Higher

Tuesday saw equities push higher as the S&P rose above 6000 since it fell below it on Dec 17. The NASDAQ rose to above 7000 for the first time since December 14.

Stock Market Outlook Chart Comments At The Close on Tue Jan 15 2019 

The S&P chart is still bearish with 6 sell signals. Meanwhile the 50 and 100 day moving averages are starting to turn back up which could be an early signal for the bulls. The Upper Bollinger Band is falling and is now below the 200 and 100 day moving averages which is bearish. The closing candlestick is bullish for Wednesday. After 4 days the SPX closed above 2600.

Stock Market Outlook review of Tue Jan 15 2019

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is positive and 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 Fri Jan 4 2019. That up signal was a bit weaker 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 showing sideways 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 is neutral. It is also extremely 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 it too is 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 moving sideways.

• 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 Resistance Levels To Be Aware Of:

2900 was support – this will be strong resistance

2860 was support – this will be resistance

2830 was light support and will be light resistance

2800 is strong resistance

2795 is light resistance

2745 to 2750 is light resistance

2725 is light resistance

2700 is resistance

2675 is light resistance

2650 is light resistance

2620 is light resistance

2600 is strong resistance.

There was good support at the 2550 level which is back to being support.

The 2500 level is support.

The S&P has light support at 2480 and better support at 2450.

There is 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 of 641 points as a drop to this level would be 21% and just 5% away from a full bear market signal ending the bull market from 2009.

 Stock Market Outlook for Tomorrow -Wed Jan 16 2019 

The dips on Monday were quickly bought into by investors. That set up Tuesday for the index to move above the 2600 level after a month of trading below it. The index has now recovered half of the correction drop. These next few days are important for the recovery. The index has to continue to move higher to break free of the correction and restart the bull.

Wednesday looks like it will oblige with both the S&P and NASDAQ looking ready to move higher although there will be choppiness and dips.

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