Stock Market Outlook for Thu Jul 16 2020 – Morning Weakness But Higher Close

The news from Moderna and better than expected earnings from Goldman Sachs Stock (GS) were enough on Wednesday to push stocks higher. It was a choppy session with the S&P rising to 3238 and falling to 3200.76 intraday. The close at 3226 was on good volume.

Stock Market Outlook Chart Comments At The Close on Wed Jul 15 2020 

The index closed above the 21 day moving average again on Tuesday and at the Upper Bollinger Band. The closing candlestick is neutral for Thursday.

You can see the Upper Bollinger Band is starting to move higher as is the 21 day moving average.

There are now 6 up signals and no down signals in the chart.

The 50 day moving average is climbing still further, which is readily seen in the chart. The 100 day is also climbing further above the 200 day.

The index is back to the standard form of the 21, 50, 100 and 200 day format which is typical of a bull market.  The index closed above 3200 on Wednesday and now needs to stay above 3200 to prove the rally has further upside.

Stock Market Outlook review of Wed Jul 15 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is falling.

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

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Wednesday July 8. That up signal was stronger again on Wednesday.

• 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 is falling slightly.

• 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 weak down signal in place and is very 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 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 rising slightly indicating changes in prices are coming.

• 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:

3200 is resistance

3150 is support

3050 is support

3000 is support

2975 is light 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

2100 is light support

2000 is good support and marks a drop of 1393 points for a 41% correction. Some analysts still believe the index will fall this low in the second half of 2020.

 Stock Market Outlook for Tomorrow – Thu Jul 16 2020 

While the news from Moderna was excellent yesterday, investors know it will take months before a vaccine can be made available for the majority of citizens. In the meantime concerns continue to rise as more Covid-19 cases are identified.

Thursday should see stocks open sideways to lower but weakness will be evident in the morning. As long as the 3200 level holds up, any selling is an opportunity on Thursday.

For the close, the index should end the day still higher unless “bad news” on Covid-19 should once again, appear. The market is stuck trading on bad news and good news surrounding the pandemic. That won’t end anytime soon, which means days will be choppy and some days will be more volatile than others. However at the present time, the underlying trend is still higher for stocks.

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