Stock Market Outlook for Mon Dec 28 2020 – Bullish and Higher

Thursday was just half a day of trading on light volume. However by the close with the SPX up 13 points and the NASDAQ above 12800, all it will take is the stimulus bill being signed by the President to pop stocks higher for the start of the final week of December.

Stock Market Outlook Chart Comments At The Close on Thu Dec 24 2020 

Thursday saw the index push a bit higher but stay above the 21 day moving average again. This left behind a bullish candlestick for Monday.

The Bollinger Bands Squeeze is is tightening, but on Monday you can see the both the Upper Bollinger Band and the Lower Bollinger Band are changing direction again. The outlook is promising for a move higher.

The weakness seen over the past week failed to see a close below the 21 day moving average. The news of the stimulus bill being signed by the President is enough to pressure the Upper Bollinger Band and push it higher.

All the major moving averages are still rising which continues to suggest that new highs lie ahead for the S&P. The up signal from Oct 21 is still very much in play for the final week of the year.

Stock Market Outlook review of Thu Dec 24 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising and positive.

• 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 strong on Thursday.

• 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 for a third day.

• 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 neutral signal in place and looks ready to pop higher.

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 sharply indicating the start of the week will be higher.

• 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 28 2020 

For Monday news of the signing of the Covid-19 Stimulus package despite the President’s misgivings, is enough to pop stocks to start the week. We should also see the start of the much anticipated Santa Claus rally this week.

Monday’s opening will be higher thanks to the stimulus package passing and the close will be higher as well.

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