Friday saw the S&P dip in the morning at the open as expected. The index fell to 4567 before buyers rushed in and pushed the index back up. By lunch hour the index was over 4600. Sellers tried to push back early afternoon and managed to send the SPX back to 4590 late afternoon. Then for the final half hour buyers pushed sellers aside and on large volume the index moved to 4608 and closed at 4605. Both are new highs for the S&P and the first closing above 4600.
The NASDAQ also had a strong day on good volume. The index closed up 50 points to a new closing high of 15498 and intraday reached 15504. Overall Friday was a good day despite selling in Apple and Amazon stocks which weighed on the markets.
October marked a strong month for the S&P with the index up 6.9% and 22.6% for the year to date.
The NASDAQ rose 7.27% in October and 20.2% for the year to date.
Let’s review the closing technical readings from Fri Oct 29 2021 to see what to expect for the first trading day of November.
Stock Market Outlook Chart Comments At The Close on Fri Oct 29 2021
The index closed below the Upper Bollinger Band for a sixth day and at the high for the day.
Friday’s closing candlestick is bullish but it also signals a high potential for a morning dip back to below 4600 before recovering back above 4600 intraday.
The Upper Bollinger Band is still rising which is bullish. The Lower Bollinger Band is now turning higher which is bearish. It is too early to predict but the Lower Bollinger Band may be indicating that while we are seeing new highs, the pace of the rally high has slowed resulting in the Lower Bollinger Band rising. This has to be watched.
The 21 day moving average which fell below the 50 day last week, is back at the 50 day moving average and will cross above it on Monday. This is bullish.
The 50 day is also turning higher as is the 100 and 200 day moving averages. This is bullish.
For Monday the chart is bullish aside from the candlestick indicating a morning drop below 4600 is coming and the rising Lower Bollinger Band.
Stock Market Outlook review of Fri Oct 29 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling for a third day and is positive. This is part of the reason for the Lower Bollinger Band rising.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Wed Oct 13 2021 . On Friday the up signal was again still strong but slipped for a sixth straight day. We will see some further weakness sometime this first week of November unless the signals unless the readings can increase in 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 rising slightly.
- 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 and still very 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 indicating we will see further changes in prices on Monday, either higher or lower.
- 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:
4600 is resistance
4550 is resistance
4525 is light support
4500 is support
4490 is support
4475 is support
4450 is support
4400 is support
4370 is light support
4350 is light support
4300 is light support
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
4175 is light support
Stock Market Outlook for Tomorrow – Mon Nov 1 2021
Friday saw excellent volume on both New York and the NASDAQ but there are some warning signals for the start of November to be aware of. MACD has lost strength for six straight days. Momentum continues to decline. The Lower Bollinger Band is rising as a result of momentum falling and of the slowing of the S&P rally. We will see some weakness during the first week of November until we get stronger signals from the MACD and momentum indicators.
Historically November is a strong month for stocks particularly right before and right after Thanksgiving. Over 75% of the time over the past 7 decades the index has been higher around Thanksgiving. Overall November is considered the start of what has become known as the “best six months of the year”.
For Monday, we will see a dip in the morning back below the 4600 level. The SPX could slip to 4590 or 4585 most likely. The dip though, will be an opportunity to setup more trades. Just as we saw on Friday, the morning dip will find me buying SPY calls. The afternoon will see a higher close.
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