On Thursday the S&P dipped once again to below the 21 day moving average reaching 4147 but that brought in buyers for a third day of dip buying. By the close the index was back above 4200 with a gain of 34 points on the day ending at 4201.
The Dow set another record high close. Friday will be more about the jobs numbers, especially at the open or in the morning, but overall the technical indicators from Thursday’s close will stay have an impact. Let’s review Thursday’s close to see what we might expect for Friday.
Stock Market Outlook Chart Comments At The Close on Thu May 6 2021
The Upper Bollinger Band is falling and the Lower Bollinger Band is rising as the Bollinger Bands Squeeze is tightening. The outlook of which way the squeeze will end is just a prediction at this point but with the index staying above the 21 day there is probably a 60% chance the index might try to make a new high next week. The jobs report for April may impact that outlook but it could be temporary.
The closing candlestick on Thursday is bullish for Friday
The 21 day moving average is climbing higher and further away from the 50 day moving average which is bullish.
The 50, 100 and 200 day moving averages are all climbing higher.
Overall the S&P chart is bullish but as explained above there are still some bearish signals that are warning investors to remain cautious until we see which way the Bollinger Bands Squeeze will end.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is once more positive 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 signal lower was a bit 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 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 in place.
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:
4225 is resistance
4200 is resistance
4150 is light support
4100 is light support
4070 is very light support
4050 is light support
4000 is Support
3900 is support and the 50 day is just above this at 3933.
3850 is support
3800 is support and the 100 day is just above this level.
3750 is good support
3700 is light support
3680 is light support
3600 is strong support and the 200 day is just above this level.
Stock Market Outlook for Tomorrow – Fri May 7 2021
For Friday the technical indicators have gained a lot of strength and all but one are pointing higher. That often means we should expect some dips but overall the outlook is bullish for a higher close.
The jobs numbers in the morning could impact the market direction. It would be just a guess which way the market will move after the April jobs report but dips are likely. The close though has a good chance of being higher for the S&P.