Wednesday was almost text book with the index dropping to the 21 day moving average once again, early morning and then climbing back. By the close the S&P was up 10 points and back, once more, to the 4700 level at 4701.
The NASDAQ rose 70 points to end the day at 15,845.
The bounce was nice to see but the technical indicators were for the most part unimpressed with the bounce. The fact that the SPX is continuing to have trouble with the 4700 level is allowing for weakness to continue to build even with the bounce.
Meanwhile on Thursday, news of another covid-19 variant found in South Africa from the WHO, which led the UK to suspend flights from six African countries, has the futures plunging very early Friday morning.
Let’s see what the closing technical indicators from Wednesday can tell us about Friday’s market.
Stock Market Outlook Chart Comments At The Close on Wed Nov 24 2021
In the chart you can see the candlestick ffrom Wednesday which reached the 21 day moving average in the morning, is still signaling a bearish outlook for Friday, despite a second bounce.
The Lower Bollinger Band is still rising above the 50 day which is bearish. The Upper Bollinger Band is trending sideways which is bearish. A Bollinger Bands Squeeze is underway which could send the index higher or lower into next week. At this point there is no clear signal up or down from the squeeze.
The 21, 50, 100 and 200 day moving averages are all climbing. This is bullish.
For Friday the chart is more bullish than bearish to end the week but bearish signals are still apparent.
Stock Market Outlook review of Wed Nov 24 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and back 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 Wed Nov 17 2021 . On Wednesday despite the rally, the down signal grew in 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 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 a stronger down signal for Friday.
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 falling.
- 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:
4700 is resistance
4655 is resistance
4600 is good support
4550 is light support
4525 is light support
4500 is support
4490 is support
4475 is support
4450 is support
4400 is support
4370 is light support
4350 is light support
4300 is light support
Stock Market Outlook for Tomorrow – Fri Nov 26 2021
For Friday the technical signals are actually unchanged from Wednesday despite the rally. The drop back to the 21 day on Wednesday for a second time, did not assist the technical signals but instead helped to increase the strength of the down signal from MACD and the Slow Stochastic. The Rate Of Change is also falling which is a bit disappointing to see.
Historically the day after Thanksgiving has been positive almost 95% of the time. While the bearish signals are certainly unchanged and continue to warn investors to stay cautious, it is the latest Covid-19 “unknown” that may sink stocks on Friday. What we may see is a plunge at the open, although it is very early when I am posting this Stock Market Outlook, and there is plenty of time for investment sentiment to improve.
Aside from history, Friday is facing a different type of event thanks to this new Covid-19 variant. With little yet known that will keep investors concerned. It will also sink airline stocks and leisure stocks that had begun to see some improvement in their outlook especially heading into 2022. With low volume expected on Friday, as this is just a half day, we could see some fairly strong selling, at least in the early morning. Heading into the lunch hour we may see an improvement but the chance of a higher close is slim for Friday. Basically the technical indicators are advising “Nice Bounce on Wednesday, But Lower”. Let’s see if history on Friday can repeat itself. Very early morning on Friday, it looks unlikely.
Stock Market Outlook Archives
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