Stock Market Outlook for Mon Mar 29 2021 – Overbought, Dips Likely But Bullish

On Friday stocks rallied from the open and by the close the S&P was at an all-time high.

The index closed up 65 points for a gain of 1.6% to end at 3974, an all-time high.

Let’s review Friday’s closing numbers to see what they can advise investors may see for the final few days of March.

Stock Market Outlook Chart Comments At The Close on Fri Mar 26 2021 

The Upper Bollinger Band on Friday is turning higher once again and the Lower Bollinger Band is starting to fall lower. Both are bullish signals.

The closing candlestick is bullish for Monday but also signals overbought which means dips will occur on Monday. However dips on Monday will find plenty of buyers ready.

The 21 day and 50 day are moving parallel which is bearish.

The 100 and 200 day moving averages are all climbing higher.

Overall the S&P chart is far more bullish than bearish to start the week off.

Stock Market Outlook review of Fri Mar 26 2021

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 down signal on Wednesday Mar 24 2021 . On Friday the down signal changed to a neutral signal.

• 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 has an up signal in place

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.

• 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.

• 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 29 2021 

The technical indicators by Friday’s close had swung right around and all are pointing to a higher start to the week. Normally when all the indicators are in agreement, we will see dips and the potential for a lower close.

Based on the technical indicators however Monday looks like it could be a volatile day with some dips and choppy trading but a high probability of a higher close as the index is entering overbought territory once again.

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