Friday was just half a day of trading but investors way over-reacted to the news of another Covid-19 variant but part of that was caused by media consumption which stressed many investors. The news that countries were quickly stopping flights from a number of African nations including South Africa also added to the “noise”. As is always the case, selling breeds more selling and eventually Friday’s half day turned into the biggest down day of the year.
But there have been a number of variants already of Covid-19 including 4 major variants however none of the media outlets I followed on Friday made any mention of this other than the most recent Delta variant which is at present the most common variant and easily spread. If Friday had been a longer day we probably would have seen a better bounce in the afternoon as the panic had already started to slow by the close.
The S&P lost 106 points for a decline of 2.2% to end the day at 4594, just 6 points below the important 4600 support level. This is strong support for the S&P. Support of this strength almost always results in a bounce.
The NASDAQ lost 353 points for a decline also of 2.2% to end the day at 15,491.
Let’s see what the closing technical indicators from Friday’s half day can tell us about Monday’s market.
Stock Market Outlook Chart Comments At The Close on Fri Nov 26 2021
In the chart you can see the candlestick from Friday fell to the Lower Bollinger Band and traded below the 21 day moving average from the open of the day. The close at the Lower Bollinger Band should setup a bounce.
At present the 50 day moving average is at 4530 which seems unlikely for the index to reach on Monday.
The Lower Bollinger Band is still rising above the 50 day which is bearish but the Upper Bollinger Band turned lower after Friday’s plunge. This has strengthened the Bollinger Bands Squeeze and turned the squeeze more bearish.
The 21, 50, 100 and 200 day moving averages are all climbing. This is bullish.
For Monday the chart is more bearish than bullish but also shows all the technical signals of a bounce about to occur.
Stock Market Outlook review of Fri Nov 26 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Wed Nov 17 2021 . On Friday the drop increased the strength of the down 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 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 stronger down signal for Monday.
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 into oversold readings. A bounce is expected.
- 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:
4700 is resistance
4655 is resistance
4600 is good support
4550 is light support
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
Stock Market Outlook for Tomorrow – Mon Nov 29 2021
The collapse of stocks on Friday was definitely overdone. All the technical indicators have turned strongly bearish. That is almost always followed by a bounce of some strength.
Historically the first trading day of the final week of November has been neutral to slightly positive. The final trading day of November, Tues Nov 30, has historically been lower 60% of the time since the mid-1970’s.
The signals by Friday’s close, are too negative after just one day. Investors should prepare for a bounce back unless there is worse news of the new Covid-19 variant now named omicron on Monday. The morning should see a strong bounce and then a partial retracement in what will be a volatile day. The close will be higher. Tuesday could start with some selling. At present I am using any further selling to add to existing positions and setup new ones as I believe we will see higher markets by the end of the year.
Stock Market Outlook Archives
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
Morning Investing Strategy Notes for Tue Apr 9 2024
Stock Market Outlook for Tue Apr 9 2024 – Morning Weakness Possible But Higher Close
