On Friday the S&P dip at the open as expected and broke through 3900 for over an hour. By 10:30 buys had pushed back and a final test of 3900 just before 11:30 held up and the index moved higher. For most of the afternoon the S&P traded in a tight range from 3920 to 3925 but as we have seen so many times this year, the final half hour saw sellers unload positions. The index though closed down just 2 points and above 3910, at 3913. Monday though will see 3900 broken again as indicated by Friday’s closing technical readings. Let’s review those readings to see what the outlook is for Monday.
Stock Market Outlook Chart Comments At The Close on Fri Mar 19 2021
The Bollinger Bands Squeeze is over from last week which is bullish for the index.
As well the 21 day moving average is starting to rise which is also bullish.
The closing candlestick on Friday is neutral to bearish for the start of the week. Often this candlestick is followed by a negative day.
. This remains bullish for the index. The closing candlestick on Thursday is bearish for Friday but it is also typical of a bounce signal.
The 100 and 200 day moving averages are all climbing higher. and the index is still above the 21 day moving average which is bullish. A close below it though could occur on Monday.
Stock Market Outlook review of Fri Mar 19 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling but 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 March 11 2021. On Friday the up signal lost more strength.
- 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 trending sideways virtually unchanged from Thursday’s close.
- 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 is a signal that we will see price changes 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:
4000 is resistance
3900 is support
3850 is support
3800 is support
3750 is good support and the 100 day is at this level
3700 is light support
3680 is light support – The 100 day moving average is at this valuation.
3600 is strong support
3550 is support – The 200 day is at this level. A drop this low would be a 10% correction.
3500 is strong support
3450 is support
Stock Market Outlook for Tomorrow – Mon Mar 22 2021
For Monday weakness will dominate and there will be dips, deeper than expected. A break of 3900 is probable.
The up signals are losing strength once again and it is all due to rising bond yields. Investors remain fearful that the Fed will not be able to control inflation and that keeping interest rates at record low levels will not be practical for the next couple of years as outlined by the Fed Chair this past week. In short, investors don’t believe the Fed. On Monday expect more weakness but the technical indicators are not showing a strong drop, just dip which should fall below 3900 but a close at or near 3900 is once again expected. If however bond yields fall lower, the index will climb higher.
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