Earnings from bank stocks surprised analysts who had been bearish right up until Tuesday morning. Instead bank stocks rose on better than expected results aside from Goldman Sachs Stock (GS) which missed estimates. By the close however, even Goldman Sachs Stock (GS) closed higher for the day. Analysts who have been bearish for the weeks leading to these quarterly earnings did an about-face on Tuesday, discussing how strong the earnings quarter may actually end up being.
The most important technical signal on Tuesday was a new unconfirmed buy signal from MACD at the close of trading.
Stock Market Outlook Chart Comments At The Close on Tue Oct 15 2019
There were a number of bullish changes in the SPX chart after Tuesday’s close. The 21 day and 50 day moving averages are turning up. The Upper Bollinger Band is back sideways and may turn up shortly which would also be bullish.
The closing candlestick on Tuesday was fully above all the major moving averages and left behind a bullish outlook for Wednesday.
The 100 day moving average is still moving sideways and the 200 day moving average is still climbing.
The two buy signals from September are still in place.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued down signal on Fri Sep 27 2019. On Tuesday an unconfirmed up signal was generated. With a reading of 2.42 we need to see this confirmed before calling it an up signal but it is a good sign for the bulls.
- 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 further.
- 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.
- 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 and Resistance Levels To Be Aware Of:
3000 is resistance
2960 is resistance
2950 was light support
2900 is light support
2860 is light support
2840 is 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.
Stock Market Outlook for Tomorrow – Wed Oct 16 2019
There are no down signals from the technical indicators at the close of trading on Tuesday.
The long green bullish candlestick is often followed by a weak candlestick so don’t be surprised if the index moves higher and then lower on Wednesday. It is of no concern and dips are opportunities to setup more trades.
We should get a confirmed MACD signal on Wednesday. If so, this is a major buy signal for the index.
On Wednesday there will be dips and they could be deeper than expected. They will be opportunities to setup more trades.
Overall the outlook remains much stronger heading into Wednesday, tomorrow.