Thursday saw stock indexes stage the expected rally follow three days of steady selling. Intraday it was a fairly volatile session with an early afternoon deep dip that took the index back to 4088 but the SPX recovered and moved above 4125 shortly before the close. It dipped back in the final 15 minutes to close at 4112.50 for a 49 point gain. The NASDAQ closed up 93 points and intraday turned briefly turned negative but managed a positive close. Let’s look at the closing technical signals from Thursday to see what the market may hold for Fri May 14 2021.
Stock Market Outlook Chart Comments At The Close on Thu May 13 2021
The Bollinger Bands Squeeze is turning sharply lower as you can see in the chart below. The Lower Bollinger Band is falling while the Upper Bollinger Band is rising. The Bollinger Bands Squeeze is ending with the market moving lower.
The closing candlestick is a bounce signal and in the chart you can clearly see the bounce off the 50 day moving average. The index is below the 21 day but above the 50 day by the close. The candlestick is bullish for Friday but is also signaling that Thursday is more than likely a bounce with a chance for some further weakness.
The 21 day moving average is turning down.
The 50, 100 and 200 day moving averages are all climbing higher.
The chart has become more bearish with only the 100 and 200 day moving averages continuing to stay bullish. All other indicators are bearish.
Stock Market Outlook review of Thu May 13 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is negative and rising.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Friday April 30 2021. On Thursday the down signal gained strength.
- 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 for Friday.
- 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 still has a strong down signal in place for a third day and is near oversold readings.
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 bounced from oversold readings and 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 also bounced and 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:
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 May 14 2021
For Friday the SPX may start the day higher or attempt a further bounce. There is a chance the SPX may try to reach 4150 before running into some heavier selling. The technical indicators as of the close on Thursday are mixed but there is a bearish sentiment still present. Overall they are indicating that Friday could be a seesaw day with dips perhaps as low as 4090. The close may be lower, possibly around the 4100 valuation.
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