Tuesday saw the S&P jump at the open of trading and race higher, pushing through 2850 to reach 2852. Then, rumors of trade negotiation issues with China blocked further moves higher and sent the index lower. Rallies in the afternoon were small and failed to recover the morning strength. By the close on Tuesday, all 3 indexes had given back the morning rally.
Stock Market Outlook Chart Comments At The Close on Tue Mar 19 2019
The SPX issued a 5th important buy signal on Tuesday as the 50 day moving average climbed above the 200 day moving average.
With the 100 day also above the 200 day, it won’t take much for the 50 day to move above the 100 day and re-establish the bull pattern for a move higher for the index.
There are now 5up signals in place on the SPX. The closing candlestick on Tuesday however is bearish for Wednesday.
The index also closed above the 21 day moving average for the seventh day.
The Bollinger Bands Squeeze is showing some signs of starting to unwind.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive and rising.
- 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. Today, Tue Mar 19 2019 the MACD issued an unconfirmed up signal.
- 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 positive but falling.
- 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 neutral 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 falling back indicating a rise in pries short-term, is not expected to hold.
- 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 and may become support shortly.
2795 is light support
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 20 2019
The technical indicators are not quite as bullish as they were on Tuesday at the close, but they are close and they have three strong up signals in place.
MACD has to confirm the upside tomorrow before it can be followed.
The market should be weaker in the morning and then strength ahead of the Fed’s decision on interest rates.
Dips will occur again on Wednesday and could be deeper than either Monday or Tuesday but by the close I am expecting the Fed Chair to announce no interest rate hike and the markets to move higher for another positive close for the week.
Stock Market Outlook Archives