The rally from the early morning plunge was great to see on Tuesday. While the morning was primarily weak, the Dow by the close was up 108 points which was excellent considering that during the day it was down at 24,416. The close was almost at the high of the day, 24748.73.
The S&P was as low as 2655 but as we saw on Monday, the index held above 2650 which brought buyers into the market. The index closed at the high of the day, up 8 points to 2682.17.
The NASDAQ was flat by the close.
Stock Market Outlook Chart Comments At The Close on Tue Nov 27 2018
The S&P index closed below the 200 day and 21 day moving averages again on Monday but above the prior 4 days of trading.
It closed inside the Lower Bollinger Band which is a bit bullish.
The Upper Bollinger Band which has been trying to climb is beginning to fall again which is bearish.
The candlestick from Tuesday’s close is bullish but often this candlestick signals a weak start to the day on Wednesday.
The 50 day moving average is still falling but has still not crossed below the 100 day although it is now close to doing so.
The SPX continues to struggle against 3 major sell signals and the break of the 2700 level on Tuesday last week.
The chart is still bearish and the rally remains suspect until it can recover and close above the 200 day moving average.
Stock Market Outlook review of Tue Nov 27 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is negative but 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 Tuesday Nov 20 2018. The down signal was weaker 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 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 has an up signal in place for Wednesday and is oversold.
- 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.
- 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 good support – this will be strong resistance
2860 was good support – this will be resistance
2830 was light support and will be light resistance
2795 is light resistance
2745 to 2750 are light resistance
2725 is light resistance.
2700 is resistance
2675 is light support
2650 is light support
2620 is light support
2600 is strong support and held the market up from the lowest pullback in the present correction
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 of 641 points as a drop to this level would be 21% and just 5% away from a bear market signal ending the bull market from 2009.
Stock Market Outlook for Tomorrow – Wed Nov 28 2018
The technical indicators are continuing to try to rise. On Tuesday we got an up signal from the Slow Stochastic. All the remaining indicators are rising and even MACD is weakening. However there are still lots of negative signals within the technical indicators which still points to the rally as being highly suspect.
Wednesday though, will belong to the Fed Chair once again. Chair Powell speaks shortly after noon hour EST and his speech could move the indexes up or down. If his speech was not on Wednesday, there would be a strong likelihood of the S&P closing higher again on Wednesday. However Powell is speaking, and that will garner the attention of investors. Any signal that the Fed will not raise rates in December and will take more of a “wait and see” attitude going forward, will send stocks soaring higher. However I am not expecting that will be the case on Wednesday. I am anticipating stocks will more likely close lower as I am expecting a “stay the course” outlook by the Fed Chair at Wednesday’s speech. Wednesday’s outlook then, is being controlled primarily by the Fed.
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