Tuesday saw investors sitting on the sidelines waiting for the results of the mid-term elections. With the elections out of the way, here is the outlook for the S&P for Wed Nov 7 2018
Stock Market Outlook Chart Comments At The Close on Tue Nov 6 2018
The index closed at the 200 day moving average on Tuesday. However there are now 3 sell signals as the 21 day moving average fell below the 200 day Mon Nov 5 2018.
The push to the 200 day moving average will probably bring out some sellers on Wednesday.
The candlestick for Wednesday is bullish but with it pushing to the 200 day, a negative day might occur.
All the major moving averages are falling lower and the Bollinger Bands and moving into what could be a Bollinger Bands Squeeze. We may see stocks take another dip shortly based on the movement of the Bollinger Bands.
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 an up signal on Mon Nov 5 2018. The up signal was confirmed today.
- 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.
- 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 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 resistance
2745 to 2750 are light resistance
2725 is light support.
2700 is important support and was retaken on Wednesday.
2675 is light support.
2650 is light support.
2620 is light support.
2600 is strong support held the market up from the latest pullback in the 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 7 2018
The bias technically is for the market to move higher in a choppy session.
However the index is also at the 200 day moving average and has regained 150 points or slightly less than half of the loss in the index since the all-time high on September 21. Usually we will see some selling at this point so while the outlook is choppy for Wednesday, there is a good chance the index will slip lower either Wednesday or Thursday.
There are 3 sell signals on the index as of Nov 5 with the 21 day falling below all 3 major moving averages. Usually there will be some down days following 3 strong down signals.
So technically, the signals are for more upside for the indexes, but be aware that the index could just as easily dip on Wednesday.
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