Thursday was a choppy day with a dramatic late afternoon rally and then a plunge following word from Pfizer of logistics behind the number of vaccines to be made available at the start of the innoculations. The close saw the index virtually unchanged with a loss of just 2 points and a close at 3666. Intraday the S&P made a new all-time high of 3682.
Stock Market Outlook Chart Comments At The Close on Thu Dec 3 2020
Thursday saw the index close above 3600 for the 7th straight trading day. The closing candlestick however is once again bearish for Friday and is signaling the potential for another day of weakness but much will depend on the jobless numbers that are released at 8:30.
The Upper Bollinger Band continued to fall lower on Thursday. The Lower Bollinger Band is climbing dramatically higher and is now at the 50 day moving average as the index heads into a Bollinger Bands 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. Often that indicates a dip should be expected shortly as the index gets ahead of itself. 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 developing.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and 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 Nov 5. The up signal on Thursday was slightly weaker.
- 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.
- 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 neutral to up signal in place. It 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 trending sideways 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 falling for a second straight day.
- 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:
3600 is resistance
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 4 2020
For Friday, the market is jobless numbers from November may have the biggest impact. They are released at 8:30, an hour before trading resumes.
Technically the indicators are pointing to another day of weakness but once more, nothing huge to the downside is being signaled.
The chart is also bullish but with growing warning signs that a bigger dip may come soon for the index.
For Friday then, it is all about the jobless numbers, but overall the outlook is still mixed but continues to hold a bias slightly to the upside.