Stock Market Outlook for Fri Jun 5 2020 – All About Jobs But Still Higher

For Friday analysts are expected a simply “awful” jobs numbers. Let’s review Thursday and see what it might be telling us we should expect for later in the day on Friday.

Stock Market Outlook Chart Comments At The Close on Thu Jun 4 2020 

A weak day on Thursday left the SPX with a neutral candlestick for Friday. The weakness was not unexpected as the index is extremely overbought and a breather was needed.

The closing candlestick on Thursday was once more at the Upper Bollinger Band which is normally bullish for the following day.

The index now has 3 major up signals in place.

The Lower Bollinger Band is falling lower and the 50 day moving average is above the Lower Bollinger Band, another bullish signal. The Upper Bollinger Band is continuing to rise along with the index.

The S&P closed above the 200 day moving average for the eleventh trading day.

Stock Market Outlook review of Thu Jun 4 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum has turn sideways but is positive.

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

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Tuesday May 19. The up signal was stronger on Thursday.

• 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 moving higher into overbought signals.

• 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 and is overbought.

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 and overbought.

• 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 falling which normally indicates we shouldn’t expect prices to be rising on Friday.

• 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:

3150 is resistance

3050 is support

3000 is support

2950 is light support

2900 is light support

2860 is light support

2840 is light support

2800 is good support

2725 is light support

2700 is light support and marked a drop of 20.4%.

2675 is light resistant

2650 is light support

2625 is light support

2600 is support

2550 is light support

2500 was good support and marked a correction of 26.3%

2344 is the next level of support and marks a 30.9% correction.

2191 was the market low on March 23 and most analysts believe this is the low point we will see.

2100 is light support

2000 is good support and marks a drop of 1393 points for a 41% correction. Some analysts believe the index will fall this low before the bear market ends.

 Stock Market Outlook for Tomorrow – Fri Jun 5 2020 

For Friday most of the indicators are still rising but they are also still signaling overbought.

Friday’s unemployment report for May is bound to be terrible following the COVID19 shutdown of the economy. But analysts believe a “bad number” is “baked” into stock prices already. Therefore any dip shouldn’t last long.

I am expecting morning weakness but an attempt to close positive on Friday to end the week higher.

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