Tuesday saw some “positive” news in the form of a delay in the restrictions with Huawei. As well Boeing shares jumped 1.7% on news that a bird collision may have caused the 737 Max crash back in March. With chipmakers oversold, it didn’t take much to get stocks jumping higher.
Stock Market Outlook Chart Comments At The Close on Tue May 21 2019
On Tuesday the index reached the 50 day moving average and then backed off closing just below it. This left behind a bullish candlestick for Wednesday.
Meanwhile the Lower Bollinger Band has fallen below the 100 day moving average which is bearish. But the major moving averages, 50, 100 and 200 are still showing signs the rally can continue.
The chart is stronger for Wednesday.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is negative 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 Wednesday May 1. On Tuesday the down signal was weaker than Monday.
- 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.
- 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 signal turned lower and has a sell signal in place.
- 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 moving sideways.
- 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:
2950 is resistance
2900 is resistance
2860 is light support
2830 is light support
2800 is strong support
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.
Stock Market Outlook for Tomorrow – Wed May 22 2019
The technical indicators are more positive after Tuesday’s rally.
The Slow Stochastic however was not impressed and turned lower indicating we should expect some weakness either Wednesday or more likely later in the week.
The Moving Average Convergence / Divergence continues to indicate there is more downside ahead but the sell signal continues to weaken as the S&P index fails to fall further.
The remaining signals are sideways to up.
For Wednesday there should be enough strength to see the indexes climb again. The morning could be weak and some selling to start the day would not be unusual. The close though, should be higher.