Stock Market Summary for Tue Jun 12 2018
Stocks on Tuesday spent the day basically moving sideways although they did try to break through 2790 as the lunch hour started and they also tested 2780 for support late in the day.
By the close though, the S&P had returned to where it had started the day.
The S&P rose 4.85 to 2786.65
The NASDAQ Composite rose 43.87 to 7703.79
The Dow Jones Industrial Average fell 1.58 to close at 25,320.73
Stock Market Outlook Chart Comments At The Close on Tue Jun 12 2018
The Bollinger Bands Squeeze is already ending with the Lower Bollinger Band falling back and the Upper Bollinger Band continuing to rise.
The Index closed the day almost unchanged from the open and that left a bearish candlestick for Wednesday.
The 50 day moving average is above the 100 day which is an up signal. The 200 day moving average is still rising and has throughout the correction.
The index is near the 2800 level where it has faced determined sellers before. This is a strong resistance level.
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is positive and rising sharply.
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 May 7. The up signal was stronger 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, rising and signaling overbought.
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 very overbought and could be ready to issue a down signal on Wednesday at the close. For Wednesday’s trading however, it is still flashing an up signal.
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 sideways indicating no change is expected.
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 Jun 13 2018
There are still no negative signals. However the index is nearing the 2800 level which has seen sellers in the past, push the index lower. We should be prepared for the index to slip later this week, but for Wednesday even an interest rate increase cannot drop the market. Dips should be expected with the S&P at this lofty level but for Wednesday, any such dips are trading opportunities. That could however change shortly and we could see stocks take a break from the rally.
Wednesday we get the Fed’s decision on a rate increase for June. I am expecting a quarter point increase and will be stunned of there is not one. However any market direction effect may be short-lived with June’s decision on interest rates as the S&P at present seems to have its own agenda.
For Wednesday however, the signals point to a weaker day with potential dips in indexes, but overall the day should end higher for the indexes.
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