Tuesday saw the markets struggle as Boeing Stock continued its decline. Unlike Monday when stocks like Apple and Facebook could help offset the Boeing decline, Tuesday didn’t have any big names rallying to draw in investors. The close saw the Dow lose almost 100 points but the S&P and NASDAQ managed small gains. The S&P closed below 2800 but spent most of the day trying to push above 2800. In the end nothing worked for the SPX and the index closed up 8 points at 2791.52. It is however in place for an easy assault on 2800.
Stock Market Outlook Chart Comments At The Close on Tue Mar 12 2019
Monday saw the 100 day moving average move above the 200 day which issued a major up signal. This is the 4th up signal. This eliminated two of the down signals from October 2018.
The Lower Bollinger Band is also moving higher and the Bollinger Bands Squeeze is now underway as you can see in the chart. It is still difficult to assess which way stocks are going to move in this squeeze. I tend to think higher but the closing candlestick today is bearish and the index just managed to close above the 21 day moving average. Overall the chart shows strength and the 50 day is pushing higher. If it moves above the 200 day moving average next week, the SPX should move to 2825 to 2850. A move above the 200 day by the 50 day means I will be buying more SPY calls for April 18 expiry.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is negative but rising for a second day.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thursday February 28 2019. The sell signal was weaker on Tuesday but still fairly strong.
- 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 signal is rising and positive but it is more sideways than higher on Tuesday.
- 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 strong 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 back moving sideways which usually means prices are not going to appreciate by much.
- 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 Resistance Levels To Be Aware Of:
2900 was support – this will be strong resistance
2860 was support – this will be resistance
2830 was light support and will be light resistance
2800 is strong resistance
2795 is light resistance
2745 to 2750 is light support
2725 is light support
2700 is light support
2675 is light support
2650 is support
2625 is light support
2600 is support.
There was good support at the 2550 level which is back to being support.
The 2500 level is support.
The S&P has light support at 2480 and better support at 2450.
There is 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 of 641 points as a drop to this level would be 21% and just 5% away from a full bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Wed Mar 13 2019
The technical indicators are still trying to point to a bullish move but Tuesday didn’t see a lot of strength except for the Slow Stochastic which has a fairly strong up signal in place. MACD is a bit weaker, but the sell signal at negative 6.09 is still strong.
The index is facing a wall of sellers and analysts are bearish that the index can push and close above 2800 and then build on that momentum. That though could be what the market needs for the remainder of the week. As well Boeing Stock (BA) may be finally slowing its descent. If there is even a slight bounce in the stock on Wednesday, it will help the indexes move higher.
For Wednesday there is a good chance the index will move primarily sideways, reach above 2800 but then close at it or slightly below it by the close, but still higher than Tuesday’s close as the index is still holding a bias to the upside.
Stock Market Outlook Archives