The S&P on Tue Jul 16 2019 closed above 3000 for a third day but fell closing down 10 points to 3004.04. All 3 indexes moved slightly lower as investors tried to decipher what the latest economic numbers would mean for the chance of a Fed rate cut later this month.
Stock Market Outlook Chart Comments At The Close on Tue Jul 16 2019
The index closed below the Upper Bollinger Band again but above all the major moving averages. The closing candlestick was bearish for Wednesday which confirmed the last few candlesticks that warned of weakness building.
The Bollinger Bands are both moving higher with the Lower Bollinger Band now above the 100 day moving average. Often this indicates that the next move will be higher for the index. The Middle Bollinger Band or 21 day moving average is climbing higher daily.
The buy signal from June 28 with the 21 day moving above the 50 day, is still gaining strength.
The 200 day moving average is moving higher above the 2800 level which is bullish and the 100 day continues to move up.
The chart is bullish for Wednesday but there is a chance for a dip to 2995 or 2990.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and falling for a second day.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Thursday June 6. The up signal was a lot 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 positive and falling.
- 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 signal has a down signal in place and is still showing the index as 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 moving lower.
- 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 and Resistance Levels To Be Aware Of:
3000 is resistance
2950 is light support
2900 is light support
2860 is better support
2830 is light support
2800 is strong support
2795 is light support
2745 to 2750 is light support
2725 is light support
2700 is light support
2675 is light support
2650 is support
2625 is light support
2600 is support.
Stock Market Outlook for Tomorrow – Wed Jul 17 2019
For Wednesday the day may open slightly higher but a dip below 3000 is likely unless fresh data points to an increased chance the Fed will still decrease interest rates this month.
The S&P could fall as low as 2990 but even within the weakness, the bias is still up. That means even if Wednesday does not close positive, the bias up will not have changed.
Overall the index still looks strong enough for a close above 3000.
MACD is what needs to be watched for any change in the signal from up to down. A down signal could last a week or longer for the index. At present even though MACD is a lot weaker it won’t take much for the index to rally back and MACD to strengthen the up signal.
For the present then, look for the S&P to fall to 2995 or at most 2990 but a close at or above 3000 is still likely.