On Tue Sep 18 2018 investors decided that more tariffs against China might not have the dire results analysts and economists were predicting. The news that China would retaliate with tariffs on 60 billion of goods seemed to buoy investors outlook. That coupled with Wilbur Ross’s statement that China was out of ammunition seemed to confirm investors jump back into stocks.
The Dow Jones had it best single day in 3 weeks and the S&P came within 5 points of the all-time high, intraday. Netflix rose almost 5% thanks to many of its productions winning Emmy Awards, Monday night. Amazon also climbed 1.73%.
Stock Market Outlook Chart Comments At The Close on Tue Sep 18 2018
The S&P ended the day below the Upper Bollinger Band and above the 21 day moving average. The closing candlestick is bullish for Wednesday. The 21 day moving average is continuing to climb and the index is staying above it which is bullish.
The Lower Bollinger Band moved above the 50 day moving average which is bearish at present but the Upper Bollinger Band may be about ready to turn back higher which would negate the move by the Lower Bollinger Band.
All the major moving averages are continuing to climb. Overall the chart looks bullish for Wednesday.
Stock Market Outlook review of Tue Sep 18 2018
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is positive to neutral for Wednesday.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thu Sep 6 2018. The down signal was a bit weaker for Wednesday but still shows signs of some strength.
- 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 still 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 issued a weak down signal 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 rose sharply on Tuesday.
- 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 unchanged for Wednesday.
- 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 Levels To Be Aware Of:
2860 I light support
2830 is light support
2795 is light support
2745 to 2750 is light support
2725 is light support.
2700 is support.
2675 is light support.
2650 is light support
2620 is light support
2600 is strong support.
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 as a drop to this level would be 20% and just 5% away from a potential bear market signal.
Stock Market Outlook for Tomorrow – Wed Sep 19 2018
Technical indicators did not make big moves higher on Tuesday despite the gains in the index. Part of the reason was the dramatic drop in the final half hour of trading on Tuesday.
There are now two sell signals, the MACD and Slow Stochastic.
Only the RSI signal is jumping back higher.
All the other signals are primarily unchanged. They seem to have a wait and see attitude.
Nonetheless there is enough strength in the technical indicators and the closing candlestick to expect a higher close on Wednesday. It could be a choppy day, with morning dips likely, but higher by the close.
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