Thu Aug 19 2021 saw the expected lower dip but then a bounce and finally a flat close. The index fell on Thursday to almost touch the 50 day moving average. That drop brought in buyers once again.
The end of the day saw only 5 points added but the market was positive and that is important for investor confidence. This marked a second day with the index managing to hold the 4400 level.
Let’s look at the closing technical indicators from Thursday to see what to expect for Fri Aug 20 2021.
Stock Market Outlook Chart Comments At The Close on Thu Aug 19 2021
On Thursday the S&P closed below the 21 day moving average which is bearish. However it bounced off the Lower Bollinger Band and managed to touch the 21 day moving average intraday. This left behind a bullish candlestick for Friday which points to a chance for a bounce.
The Lower Bollinger Band and Upper Bollinger Band have turned sharply into a Bollinger Bands Squeeze which at present is positions to send the index lower.
All the major moving averages are still climbing which is bullish. For Friday the SPX chart remains decidedly bearish.
Stock Market Outlook review of Thu Aug 19 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and 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 Thursday Aug 12 2021. On Thu Aug 19 2021 the down signal saw a strong confirmation.
- 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 trending sideways.
- 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 down signal in place and not 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 trying to turn sharply higher.
- 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 falling.
- 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:
4475 is resistance
4450 is resistance
4400 is light support
4370 is support
4350 is light support
4300 is light support
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
4175 is light support
4150 is light support
4100 is good support
4070 is light support
4050 is light support
4000 is good support
3900 is support
3850 is support
3800 is support
3750 is good support
3700 is light support
3680 is light support
3600 is strong support
Stock Market Outlook for Tomorrow – Fri Aug 20 2021
The 4400 level held up again on Thursday for a second day. Selling was fairly strong but buyers kept pushing back to finally close positive by the end of the day.
The SPX is now facing a new strong confirmed down signal. The SPX is no longer very overbought. The technical indicators though are split with some pointing still lower and some trying to turn back up.
We should see another bounce attempt on Friday with the potential for a higher close. The problem for Friday is many investors will not want to hold positions over the weekend. That means we could see some heavier selling in the mid to late afternoon, and that could sink the index to end the week.
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