Alphabet earnings were strong enough to propel the indexes at the open, a lot higher. Following the initial rally the indexes wavered a little and in the late morning and afternoon they gave back much of the morning gains. The NASDAQ in particular ended the day flat giving back a new all-time intraday high. However the Dow and the S&P pushed back and closed off the intraday lows. The S&P is now within 52 points of the all-time high.
Stock Market Outlook Chart Comments At The Close on Tue Jul 24 2018
The S&P ended the day on Tuesday above the 2810 level. This marked the seventh day in eight trading days above 2800. However today was the first day where there was action pushing to the upside. Prior to today, most of the action was sideways in the S&P.
The index pushing higher and then dropping back and finally recovering some of the drop into the close left behind a potential reversal candlestick. Often this kind of candlestick is followed by a down day but overall even a down day will not stop the index from moving higher this week.
All the major moving averages are rising.
The Bollinger Bands are continuing to signal the index will move higher.
The SPX chart is still bullish.
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and moving sideways.
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 still strong 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 and falling.
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 has a down signal in place for Wednesday.
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.
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 and rising, indicating that higher prices are expected shortly.
Support Levels To Be Aware Of:
2795 is light support
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 25 2018
For Wednesday the outlook is still higher despite the reversal candlestick for Wednesday.
The technical indicators are overwhelmingly bullish. Only the Slow Stochastic has a sell signal from overbought in place and the Ultimate Oscillator is signaling a move lower is expected.
All the other technical indicators are flashing up or higher signals.
Even if Wednesday does not end positive, the overall outlook is still higher for the S&P and NASDAQ indexes. However at present the outlook is still higher for Wednesday.
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