Thursday was expected to be a see-saw day following the inauguration day rally on Wednesday.
Intraday the S&P made another new high reaching 3861.45. The close was positive despite heavier selling through much of the day. The S&P squeaked out a 1.2 point gain to close at 3853.07.
Stock Market Outlook Chart Comments At The Close on Thu Jan 21 2021
On Thursday the index closed once again at the Upper Bollinger Band but the see-saw day left the closing candlestick bearish for Friday.
The Bollinger Bands are back in bullish mode with the Upper Bollinger Band climbing and the Lower Bollinger Band turning down away from
The major moving averages are still rising and the up signal from Oct 21 is still in play (no longer shown in the chart). The chart is still bullish with only the closing candlestick being slightly bearish.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling 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 Jan 20. On Thursday, the up signal was confirmed.
- 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 unchanged as it turned sideways on Thursday by the close.
- 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 unchanged and turned sideways.
- 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.
- 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:
3800 is resistance
3750 is resistance
3700 is light support
3600 is strong support
3550 is support
3500 is strong support
3450 is support
3400 is support
3375 is support
3300 is strong support
3275 is support
3200 is support
3150 is support
3050 is support
3000 is strong support
Stock Market Outlook for Tomorrow – Fri Jan 22 2021
The index on Friday looks set to take a break and probably close lower. The technical indicators though are still bullish and MACD (Moving Average Convergence / Divergence) confirmed yesterday’s up signal.
We could see slightly wider moves on Friday but a break of 3800 is very unlikely as the technical indicators are pointing to a sideways day with weakness.
Friday will see some weakness as investors take profits ahead of the final week of January.