Thursday saw a bit more drama with the S&P dipping to a low of 3645, the lowest since Dec 2. The index though found buyers and pushed back turning positive later in the day only to dip slightly at the close for a loss of 4 points. The close was 3668, almost unchanged. For the day the index had a spread of 33 points from intraday low to intraday high. The NASDAQ continued with its advance rising 66 points to close at 12405.
Stock Market Outlook Chart Comments At The Close on Thu Dec 10 2020
Thursday saw the S&P close above 3600 but below 3700. The closing candlestick for Friday is bearish.
Meanwhile the index has entered a Bollinger Bands Squeeze. It’s a bit early to predict which direction the index will move out of the squeeze.
The 21 day, 50 day, 100 day and 200 day moving averages are all rising, a bullish sign. The 21 day is rising rapidly as well and moved higher above 3600 on Tuesday. Often the speed of the climb for the 21 day indicates a dip should be expected shortly as the index is overbought. The up signal from Oct 21 is still in play, and the chart remains bullish despite the closing candlestick, concerns over the rise of the 21 day and the Bollinger Bands Squeeze.
Stock Market Outlook review of Thu Dec 10 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is moving sideways, unchanged from Wednesday.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Nov 5. The up signal was lost on Thursday and the day ended with an unconfirmed down signal.
- 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 rising.
- 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 for a second day.
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 sideways indicating not large change in prices is expected for 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:
3700 is resistance
3600 is light support
3550 is support
3500 is support
3450 is support
3400 is support
3375 is support
3300 is support
3275 is support
3200 is support
3150 is support
3050 is support
3000 is support
Stock Market Outlook for Tomorrow – Fri Dec 11 2020
For Friday the Moving Average Convergence / Divergence technical indicator (MACD) has a new down signal in place which is unconfirmed. If Friday ends lower, it will confirm the down signal.
With a Bollinger Bands Squeeze underway, the MACD signal may be indicating we should expect some further weakness to start next week.
For Friday there is still the chance for a bounce especially if any positive news on the stimulus package should arrive. That though seems unlikely.
Overall the technical indicators have lost a lot of strength. Friday looks set to end lower.
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