Stock Market Outlook for Fri Mar 12 2021 – Early Morning Dip Likely But Sideways and Higher Close

The Dow Index soared again on Thursday once again setting new all-time highs.

The S&P closed up 40 points to end the day at 3939 just 21 points from its all-time high.

The NASDAQ closed up 329 points wiping out March’s loss and leaving the index just 5% below its all-time high.

Let’s review Thursday’s closing technical indicators to see what’s in store for Friday.

Stock Market Outlook Chart Comments At The Close on Thu Mar 11 2021 

The Bollinger Bands Squeeze widened further on Thursday. This is bullish for the index. The closing candlestick on Thursday is bullish for Friday.

The index managed to close back above the 21 day moving average for a second day which is bullish.

The 21 day moving average is still moving lower but should not fall below the 50 day but turn back up shortly.

The 50, 100 and 200 day moving averages are climbing higher.

The chart is more bullish as the bull market remains intact following the latest bit of selling which is now ended.

Stock Market Outlook review of Thu Mar 11 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 a down signal on Mon Feb 23 2021. On Thursday we received a new unconfirmed up 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 an up signal for a fourth straight 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 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.

• 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:

4000 is resistance

3900 is resistance

3850 was support is now light resistance.

3800 is support

3750 is good support and has assisted in keeping the selling in check

3700 is light support

3680 is light support – The 100 day moving average is at this valuation.

3600 is strong support

3550 is support

3500 is strong support

3450 is support. The 200 day moving average is just above this valuation. A drop this low would represent an 11% correction.

 Stock Market Outlook for Tomorrow – Fri Mar 12 2021 

For Friday a new unconfirmed up signal from MACD should see a confirmation by the end of the day.

All the other technical indicators are turning back up and are more positive.

For Friday we should see a dip in the early morning, perhaps right at the open and then a push higher which may see another dip and then sideways action but with a bias up.

By the close I am expecting a close above 3940 to end what has been an excellent recovery week for the indexes.

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