Markets stopped their sell-off on Tuesday but the rally attempt failed and stocks gave back much of the day’s gains. All three indexes closed well off their highs of the day but managed to stay positive, which is important for the recovery from Monday’s sell-off.
Oil moved higher pushing above $70 for West Texas Intermediate and above $76 for Brent Crude.
Stock Market Outlook Chart Comments At The Close on Tue Jun 26 2018
Stocks rallied on Tuesday but by the close gave back most of the rally. The S&P did however close positive and stayed above the 50 day moving average. Both of these are bullish signs.
The closing candlestick however was bearish for Wednesday however it also is often a signal of a bounce coming. Therefore we could see either on Wednesday according to the closing candlestick.
The moving averages are all still climbing and there are no indications from the moving averages that the index is about to pullback much further.
Stock Market Outlook review of Tue Jun 26 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: For momentum I use a 10 period when studying market direction. Momentum is negative and falling.
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 a a down signal on Jun 19. It 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 negative 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 signaling lower for the index and is oversold however by the close the signal lines looked like there may be a turn back up for the indicator.
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 deeply oversold and is signaling a bounce is likely.
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 neutral on the market direction for Wednesday.
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 27 2018
Tuesday saw all 3 indexes manage to close positive. While breadth was poor there are some signals that are indicating a second bounce attempt may be in the works for Wednesday. We could see the markets open weak and dip back lower but then bounce back for a second attempt to rally from Monday’s carnage. For Wednesday, expect weakness, dips and another bounce attempt.
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