Thursday saw more selling as the SPX fell almost to the 21 day moving average. The index lost 32 points to close at 4327. Aside from the point loss there were a number of signals investors should be aware of to start off next week.
Let’s review the close of Fri Jul 16 2021 to see what to expect for the start of next week.
Stock Market Outlook Chart Comments At The Close on Fri Jul 16 2021
The S&P closed below the Upper Bollinger Band and almost at the 21 day moving average. This caused a number of changes in the chart.
The Upper Bollinger Band is starting to tilt lower while the Lower Bollinger Band is swinging higher. This may turn into a new Bollinger Bands Squeeze by mid-next week. At present this is bearish.
The closing candlestick is also bearish for the start of the week but is also signaling the potential for a bounce on Monday.
All the major moving averages are climbing which is bullish but the signals identified above indicate investors should expect more selling to start off the week.
Stock Market Outlook review of Fri Jul 16 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and hardly 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 Friday June 25. On Friday, that up signal was changed to an unconfirmed down signal. We may see a confirmed down signal by Monday’s close.
- 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 and is no longer 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 and nearing oversold readings.
- 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:
4400 is resistance
4370 is resistance
4350 is resistance
4300 is light support
4290 is light support
4270 is light support
4250 is light support
4225 is light support
4200 is light 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 Jul 19 2021
For Monday, we could see a bounce near the open. There is a good chance the index may dip lower at the open or near the open and hit the 21 day moving average and then attempt a bounce.
Typically we have seen these day’s of weakness be followed by buying but at some point that will stop and investors will continue to sell the index lower. What investors need to ask is what has changed in the market that would warrant no bounce on Monday. For now the big question seems to be the rate of inflation and whether it will be transitory as the Fed has indicated. Investors are split on that outlook which is why selling continuing on Friday but the market remains positioned for a potential bounce.
If Monday sees more selling and no bounce, the 21 day will break. That will leave the 50 day as the potential line for a bounce. Support at present is found at 4300 in the S&P. That’s the level to watch for a potential bounce, if there is more selling on Monday.
The other item of importance is the new but unconfirmed down signal from MACD. This is one of the more accurate technical indicators for reading the index. We will definitely know more on Monday by the close. For now though there is a good chance for a bounce on Monday but almost as much a chance selling will continue even if there is a bounce. Just as we saw on June 21, a big bounce will send the index back higher. A small bounce though will be suspect and probably set the index up for a further dip. Stay cautious for Monday but the odds of a bounce are reasonably good.
Stock Market Outlook Archives
Stock Market Outlook for Fri Apr 19 2024 – Deeply Oversold – Bounce Likely – Higher Close
Morning Investing Strategy Notes for Thu Apr 18 2024
Stock Market Outlook for Thu Apr 18 2024 – Deeply Oversold – Bounce Attempt Expected
Morning Investing Strategy Notes for Wed Apr 17 2024
Stock Market Outlook for Wed Apr 17 2024 – Another Bounce Attempt
Morning Investing Strategy Notes for Tue Apr 16 2024
Stock Market Outlook for Tue Apr 16 2024 – Deeply Oversold
Morning Investing Strategy Notes for Mon Apr 15 2024
Stock Market Outlook for Mon Apr 15 2024 – Expect A Bounce
Morning Investing Strategy Notes for Fri Apr 12 2024
Stock Market Outlook for Fri Apr 12 2024 – All About Bank Earnings
Morning Investing Strategy Notes for Thu Apr 11 2024
Stock Market Outlook for Thu Apr 11 2024 – Weakness and Lower
Morning Investing Strategy Notes for Wed Apr 10 2024
Stock Market Outlook for Wed Apr 10 2024 – All About The CPI Numbers
