Tuesday July 21 saw stocks continue their advance as investors are convinced another round of stimulus is coming which will continue to support the economy into the fall. Stocks moved higher for most of the day and then fell back near the close. The NASDAQ closed negative while the S&P managed a small gain of 5 points to end the day at 3257.
Stock Market Outlook Chart Comments At The Close on Tue Jul 21 2020
The index closed above the 21 day moving average again on Tuesday for the 13th straight day. It also closed above the 3200 level for the fifth straight day and also closed at the Upper Bollinger Band which is continuing to rise. All of this is bullish.
The trading action on Tuesday left behind a bullish candlestick for Wednesday.
The Lower Bollinger Band is slowly dipping which could signal the end of the Bollinger Bands Squeeze.
There are now 6 up signals and no down signals in the chart.
The 50 day moving average is climbing still further, which is readily seen in the chart. The 100 day is also climbing further above the 200 day.
The index is back to the standard form of the 21, 50, 100 and 200 day format which is typical of a bull market.
Stock Market Outlook review of Tue Jul 21 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is 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 Wednesday July 8. That up signal was stronger again 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 is 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 has a neutral signal in place and is very 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.
- 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 also rising.
- 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:
3275 is resistance
3200 is still resistance
3150 is support
3050 is support
3000 is support
2975 is light support
2950 is light support
2900 is light support
2860 is light support
2840 is light support
2800 is good support
2725 is light support
2700 is light support and marked a drop of 20.4%.
2500 was good support and marked a correction of 26.3%
2191 was the market low on March 23
2100 is light support
2000 is good support and marks a 41% correction from the all-time high. Some analysts still believe the index will fall this low in the second half of 2020.
Stock Market Outlook for Tomorrow – Wed Jul 22 2020
For Wed Jul 22 2020 the technical indicators are still quite bullish and MACD continues to gain in upside strength. However the Slow Stochastic sent at a neutral signal at the close and the Ultimate Oscillator turned lower. We could see some weakness on Wednesday including a dip down to 3235 or 3240.
However despite any dips, the outlook is still higher for the S&P on Wednesday.
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