Tuesday saw the S&P manage to break above 3150 but then in the late afternoon the index moved lower and closed at 3131, up 13 points on the day but was not able to hold onto 3150. The NASDAQ closed at another new record high at 10,131.
Stock Market Outlook Chart Comments At The Close on Tue Jun 23 2020
The index closed again above the 21 day moving average but left behind a neutral candlestick for Wednesday. The Upper Bollinger Band is moving lower as the index is unable to climb higher.
The Lower Bollinger Band is back climbing higher which increases the chance of another Bollinger Bands Squeeze forming late this week or into next week unless the S&P can start to climb higher.
There are 4 up signals in place and the 50 day moving average is nearing the 200 and 100 day moving averages. Once it moves above those two moving averages, it will signal an end to the February-March sell-off.
Overall the index is more bullish than bearish but is having trouble moving much higher.
Stock Market Outlook review of Tue Jun 23 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising but still negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Friday June 12. The down signal was still strong 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 and negative.
- 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 weak up signal in place for Wednesday.
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 slightly.
- 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:
3200 is resistance
3150 is resistance
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%.
2675 is light resistant
2650 is light support
2625 is light support
2600 is support
2550 is light support
2500 was good support and marked a correction of 26.3%
2344 is the next level of support and marks a 30.9% correction.
2191 was the market low on March 23
2100 is light support
2000 is good support and marks a drop of 1393 points for a 41% correction. Some analysts still believe the index will fall this low in the second half of 2020.
Stock Market Outlook for Tomorrow – Wed Jun 24 2020
Tuesday’s higher close did not have a lot of strength and the closing candlestick is indicating we could see another choppy day with plenty of sideways action. This day though could end a bit lower.
The index is having trouble breaking to the 3200 level which often signals that the ongoing rally, weak as it is, may need more time to build strength to push through sellers.
As June marks the end of another quarter, we could see many investors decide to take some profits as dozens of stocks are at or near all-time highs including Apple, Microsoft, Facebook, Netflix, and even stocks like Winnebago. The chance there is a lot more upside is limited at present which is why we will probably see some selling shortly.
Tuesday’s technical indicators are mixed with both strength and weakness as seen in signals, like MACD, pointing lower. For Wednesday then, I am expected to see some deeper dips, which will bring in buyers, but a neutral to slightly lower close is quite possible.
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