Tue Sep 3 2019 saw investors still focused on the chance of a recession. Factory orders came in at the contracted to 49.1 in August, the first contraction since January 2016. Analysts blamed the ongoing trade tarriffs. The 10 year treasury fell to its lowest level since July 2016 on the news of the contraction. Investors sold the news sending stocks lower to start September. However by the close, all three indexes were off their lows of the day.
Stock Market Outlook Chart Comments At The Close on Tue Sep 3 2019
The potential of a Bollinger Bands Squeeze continued to develop on Tuesday which is evident in the chart below. The outcome is not yet known. Stocks could move up or down out of the squeeze.
The 21 day moving average is below 2900 and below the 100 day moving average. There are two down signals in place. The first was Aug 16 and the second was Aug 29.
The closing candlestick is bearish for Wednesday but at the same time often signals a bounce attempt.
The 50 day moving average is still falling while the 100 day moving average is slipping below the 2900 level.
The 200 day moving average is trending more sideways now, than climbing.
The S&P chart still looks bearish for Wednesday. To signal that the index intends to move higher we want to see it close above 2950 or 2960. The close on Tuesday gave no indication that the index could try to push to 2950 this week.
Stock Market Outlook review of Tue Sep 3 2019
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and is now negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Thurs Aug 29. The up signal was stronger again 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 positive but 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 signal 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 falling.
- 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.
- 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 light resistance
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 Sep 4 2019
For Wednesday the technical indicators are not strongly bearish, but they are weak.
However there are up signals in MACD and the Slow Stochastic. The Ultimate Oscillator is falling but it is still positive and the Rate Of Change is not signaling a move lower, just not a move higher in prices.
So while the indicators are definitely not strongly bullish, they are also not strongly bearish.
Wednesday should see stocks try to rally but unless the indicators can improve, there are too many weak signals for any kind of sustained rally at this point. Instead Wednesday looks like a rally but then a flat to lower close.
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