Stock Market Outlook for Fri Dec 14 2018 – Down

We have certainly seen enough of these down days in the markets! This week investors have bought stocks only to turn around and sell them out, usually on the same day they were bought.

The type of action we saw on Thursday has been typical for this correction and investors remain worried that there is more downside action that upside potential, at present, in the indexes. That is leading to downward pressure on the indexes.

Stock Market Outlook Chart Comments At The Close on Thu Dec 13 2018 

The S&P chart remains bearish and a 5th sell signal occurred today as the 50 day moving average fell below the 200 day moving average. This is very bearish for the index.

All the major averages are still falling and the Bollinger Bands, both the Upper and Lower, are falling which supports the latest sell signal in the technical analysis of the market.

The closing candlestick is also bearish for Thursday.

Stock Market Outlook review of Thu Dec 13 2018

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is negative and falling.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Mon Dec 10 2018. That 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 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 has an up signal in place for Friday.

• 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 moving sideways and oversold.

• 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 moving sideways and oversold.

• 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 is light resistance

2725 is light resistance

2700 is resistance

2675 is light resistance

2650 is light resistance

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 Dec 12 2018 

Today’s bounce attempt was lost late morning and failed to recover. The chart is very bearish but the technical indicators are showing the index is very oversold and a bounce could be expected at any time.

For Wednesday, I am expecting a bigger bounce attempt as investors pick through stocks that have been hammered lower.

With so many sell signals however, any bounce at this point is just that, a bounce and further downside movement should be expected shortly.

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