On Friday the SPX continued with its rally, making another new all-time closing high intraday.
By the end of the day the index was up 44 points for an impressive 84 point gain on the week. The close was 4411, just 4 points below the new all-time high.
This marked the best week for the index since the 4th week of June when the index gained 114 points.
Let’s review Friday’s closing technical outlook to see what to expect for the start of the final week of July.
Stock Market Outlook Chart Comments At The Close on Fri Jul 23 2021
The S&P closed above the 21 day moving average and at the Upper Bollinger Band. This left a bullish candlestick for Monday but also an overbought signal.
The Upper Bollinger Band is now turned sideways while the Lower Bollinger Band is swinging higher and is ready to move above the 50 day moving average. A Bollinger Bands Squeeze is underway which could swing the market either way. At present the outlook is bearish to neutral for the outcome.
All the major moving averages are still climbing which is bullish.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is unchanged and still positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Friday July 16. On Friday the down signal was neutral.
- 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.
- 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 still has an up signal in place 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 rising and 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 which indicates prices are expected to change on Monday.
- 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 light support
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 26 2021
For Monday the technical indicators are signaling strength to the upside as well as being overbought. The rally on Friday marked a fourth day of the rally from last Monday’s big decline. With the technical indicators pushing into overbought signals and MACD signaling neutral to start the week, the SPX looks ready to take a breather. As well on Monday concerns are growing once again over the latest Covid-19 variant. But the bias is still bullish although there will be dips and weakness on Monday but a higher close is still possible.