Friday saw another new high on the S&P in what was a very choppy session with the index trading between 4462 and 4467 in the morning and 4468 and 4461 in the afternoon. Tight range trading is also a sign of the market being overbought. This this week of August investors should expect a couple of days of lower closes but overall we saw a new up signal confirmed on Friday. A new all-time high in August and a confirmed up signal is rare for the month.
Let’s look at the closing technical indicators from Friday to see what to expect for Mon Aug 16 2021.
Stock Market Outlook Chart Comments At The Close on Fri Aug 13 2021
On Friday the S&P closed slightly higher again, pushing up 7 points to end at 4468, a new all-time high. This slightly higher close and tight trading on Friday left behind another bearish candlestick for Monday.
The Lower Bollinger Band is continuing to fall away from the 50 day moving average and the Upper Bollinger Band is continuing to rise. This is a bullish signal for the index.
As well, all the major moving averages are still climbing which is bullish. For Monday only the candlestick is bearish in the SPX chart.
Stock Market Outlook review of Fri Aug 13 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising as of Friday’s close and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Thursday Aug 12 2021. On Fri Aug 13 2021 the up signal was confirmed.
- 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 toward overbought readings.
- 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 and is extremely overbought.
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 and and signaling overbought.
- 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:
4475 is resistance
4450 is resistance
4400 is light support
4370 is 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
3700 is light support
3680 is light support
3600 is strong support
Stock Market Outlook for Tomorrow – Mon Aug 16 2021
For Mon Aug 16 2021, the SPX technical indicators are signaling that the index is overbought.
The closing candlestick is indicating we should expect some weakness and dips either Monday or Tuesday.
With most of the technical indicators rising and many signaling overbought, it will not be surprising to see some dips that could be deeper on Monday. As well, with the likelihood of a collapse in Afghanistan and news of the Afghan President Ghani fleeing this may also weigh on investors. However as Afghanistan plays very little role economically in the “bigger” scheme of the markets and industries, it could have only a limited impact to start the week.
Overall the outlook still looks bullish despite the negativity. That means a higher close may have a slight chance on Monday. For the week though, the outlook remains bullish.
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