On Tuesday bank stocks pulled back following a one day rally. PepsiCo was the main stock focused on as it moved ahead 4.76% but with stocks at their highest level since February’s highs, the rally stalled.
Stock Market Outlook Chart Comments At The Close on Tue Jul 10 2018
The S&P ended the day on Tuesday slightly higher but the pullback from the intraday high left a bearish candlestick for Wednesday.
However the first time in two weeks, the 21 day moving average is starting to turn higher.
The 50, 100 and 200 day moving averages are continuing to move higher.
Aside from the closing candlestick on Tuesday, the chart remains bullish.
Stock Market Outlook: Technical Indicators Review:
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 an up signal on July 9. The up signal was confirmed on Tuesday.
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 but no longer rising and instead turning sideways.
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 signaling up for Wednesday and is now overbought.
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 is often the first indicator to show an overbought or oversold signal. The RSI signal is rising and also overbought.
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. 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. The rate of change signal is positive but not rising, instead moving sideways.
Support Levels To Be Aware Of:
2745 to 2750 is light support
2725 is light support.
2700 is support.
2675 is light support.
2650 is light support
2620 is light support
2600 is strong support.
There is good support at the 2550 level from where the market bounced back from the recent correction low on Feb 9.
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 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Wed Jul 11 2018
For Wednesday the technical indicators are pointing to a probable day of weakness.
A number of the signals are now overbought and two are also moving sideways, basically unchanged from Tuesday which is usually a sign of an overbought market.
The rally has been strong but news of another $200 billion of products targeted for tariffs with China is probably the catalyst to stop the advance on Wednesday and end the day negative.
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