The final trading day for September started off with high hopes as the indexes climbed from the open. But by 10:00 the day’s high was already in with the index struggling to break much above 4380. That brought sellers back in once more and by the noon hour the index was down at 4315. An afternoon rally was cut short with sellers waiting at the 4350 level and chasing the index lower until the final half hour when, just like Wednesday, the index saw large volume, probably much of it automated, and a plunge to a new low below the 100 day moving average. For the day the index lost 52 points to close at 4307. September ended with the S&P down 4.8%, the worst month since March 2020 and worst September since 2011.
Let’s review the closing technical indicators from Thursday to see what to expect for the first trading day of October.
Stock Market Outlook Chart Comments At The Close on Thu Sep 30 2021
On Thursday the index fell through the 100 day moving average marking the lowest point of the sell-off. The Lower Bollinger Band has fallen below the 100 day and the Upper Bollinger Band continues to trend sideways.
The 21 day moving average is now at the 50 day and poised to fall below it on Friday, for another down signal.
The 100 and 200 day moving averages are still climbing which is bullish..
For Friday there are more bearish signals than bullish. The index is showing signs of stress and being oversold.
Stock Market Outlook review of Thu Sep 30 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and staying negative. It is oversold.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thu Sep 9. On Thursday the down signal gained more strength but is also oversold.
- 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 falling and negative. It is oversold.
- 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.
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 falling and oversold.
- 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 sharply and at levels which normally see the market bounce.
- 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:
4550 is resistance
4525 is resistance
4500 is resistance
4490 is resistance
4475 is light support
4450 is light support
4400 is good support
4370 is good support
4350 is light support
4300 is light support
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
4175 is light support
4150 is light support
4100 is good support
4070 is light support
4050 is light support
4000 is good support
3900 is support
3850 is support
3800 is support
3750 is good support
Stock Market Outlook for Tomorrow – Fri Oct 1 2021
The SPX index is at a point where it could either try to dip to the 200 day or it may dip and then bounce. At present it is down 237 points which is the steepest downturn of 2021. The technical indicators are signaling that the index is very oversold. The selling action at the end of the day on Thursday though was quite negative. That could continue at the open on Friday and then buyers may finally decide some stocks are cheap enough to step back in.
For Friday watch for a further decline and then a bounce attempt, but this most likely will not signal the end of the sell-off. Next week should see some further weakness.
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