The CPI numbers on Thursday were higher than many estimates but lower than others as well. It came in at 5% which was the highest 12 month increase since August 2008 which registered 5.4%. Many analysts felt that the inflation rate would pullback after a few more months of the economy reopening. Most pointed out that the inflation rate of 5.4% in August 2008 didn’t last.
Investors pushed the index higher at the open which was followed by a morning drop. That lead to another rally attempt. Intraday the index reached 4249.74 for a new all-time high. The S&P closed at 4239 up 19 points and a new closing high.
Let’s review Thursday’s closing technical indicators to see what we should expect for Friday.
Stock Market Outlook Chart Comments At The Close on Thu Jun 10 2021
The SPX ended the day higher but left behind a bearish candlestick for Friday. This is the fourth straight bearish candlestick.
The Lower Bollinger Band continued to slowly fall while the Upper Bollinger Band is trying to move higher. Both are bullish signals.
A potential concern even for short-term trades could be the 21 day moving average falling below the 50 day. Looking at the chart and the rate of decline by the 21 day, we could see this happen by the start of next week. If that happens, it will be a short-term down signal.
Meanwhile the 50, 100 and 200 day moving averages are climbing. These are bullish signals.
Overall the SPX chart is still more bullish than bearish with just one bearish signal and a potential for a second one. All the other signals are bullish.
Stock Market Outlook review of Thu Jun 10 2021
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 Friday May 28 2021. On Thursday the up signal was stronger.
- 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 now unchanged.
- 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 tomorrow 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 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 which often indicates prices are going to make a bigger move.
- 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:
4250 is resistance
4225 is resistance
4200 is resistance
4150 is light support
4100 is light support
4070 is very light support
4050 is light support and where the 50 day is currently residing. This would represent a 4.4% decline.
4000 is good support
3900 is support and just below the 100 day moving average.
3850 is support
3800 is support
3750 is good support
3700 is light support and just below the 200 day moving average.
3680 is light support
3600 is strong support
Stock Market Outlook for Tomorrow – Fri Jun 11 2021
For Friday the technical indicators have shifted and are now primarily positive except for the Slow Stochastic which continues to signal lower for stocks.
The jump higher often is retested the following morning which means we could see the index slip a bit Friday morning. However any dips are opportunities as the technical indicators are pointing primarily higher by the end of the day.
Friday then will be choppy but dips are opportunities to setup trades and the day will end slightly higher.
Stock Market Outlook Archives
Stock Market Outlook for Wed Apr 24 2024 – Some Weakness But Higher Close
Morning Investing Strategy Notes for Tue Apr 23 2024
Stock Market Outlook for Tue Apr 23 2024 – Bounce But Lower
Morning Investing Strategy Notes for Mon Apr 22 2024
Stock Market Outlook for Mon Apr 22 2024 – No Change – Deeply Oversold Bounce Possible
Morning Investing Strategy Notes for Fri Apr 19 2024
Stock Market Outlook for Fri Apr 19 2024 – Deeply Oversold – Bounce Likely – Higher Close
Morning Investing Strategy Notes for Thu Apr 18 2024
Stock Market Outlook for Thu Apr 18 2024 – Deeply Oversold – Bounce Attempt Expected
Morning Investing Strategy Notes for Wed Apr 17 2024
Stock Market Outlook for Wed Apr 17 2024 – Another Bounce Attempt
Morning Investing Strategy Notes for Tue Apr 16 2024
Stock Market Outlook for Tue Apr 16 2024 – Deeply Oversold
Morning Investing Strategy Notes for Mon Apr 15 2024
Stock Market Outlook for Mon Apr 15 2024 – Expect A Bounce
