Stock Market Outlook for Mon Dec 14 2020 – Bounce Likely

Friday saw another day of swings and of the index falling to the 21 day moving average. That brought about a small bounce and the index ended the day down just 4 points to 3663.

Stock Market Outlook Chart Comments At The Close on Fri Dec 11 2020 

Friday saw another close above the 3600 level but below 3700. There were two important events on Friday. The first was the confirmed down signal from the Moving Average Convergence / Divergence technical indicator. The second event on Friday was the index falling to the 21 day moving average. This saw buyers rush back into stocks.

Meanwhile the index continues in the Bollinger Bands Squeeze.

The 21 day, 50 day, 100 day and 200 day moving averages are all rising, a bullish sign. The 21 day is still rising. The up signal from Oct 21 is still in play, and the chart remains bullish despite the closing candlestick, concerns over the Bollinger Bands Squeeze and the down signal confirmation from MACD.

Stock Market Outlook review of Fri Dec 11 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is moving sideways, down only slightly from Thursday.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a a down signal on Dec 10. The down signal was confirmed on Friday.

• 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

• 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 for a second day and is 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 falling.

• 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:

3700 is resistance

3600 is light support

3550 is support

3500 is support

3450 is support

3400 is support

3375 is support

3300 is support

3275 is support

3200 is support

3150 is support

3050 is support

3000 is support

 Stock Market Outlook for Tomorrow – Mon Dec 14 2020 

For the start of the week, Monday should see a bounce which started on Friday. Some of the bounce will be caused by continuing talks of a stimulus package but much of it is being caused by the market technically bouncing off the 21 day moving average.

The bounce on Friday may not hold for the entire day but historically this week is an up week for the index. Monday should see the morning start strong, perhaps dip slightly late morning or over the lunch hour but try to close positive on the day.

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