Friday saw the index slip slightly lower as investors worried about the September jobs numbers which were far lower than the consensus. 194,000 jobs were created whereas analysts had believed more than 500,000 jobs would be announced.
Investors though, seemed reluctant to sell on the poor news and an early afternoon dip down to just above 4385 found few sellers. Instead the index attempted a weak rally which failed and the index lost just 8 points, all of which occurred in the final 30 minutes of trading.
Let’s review the closing technical indicators from the SPX on Friday to see what to expect for Monday.
Stock Market Outlook Chart Comments At The Close on Fri Oct 8 2021
Friday saw the SPX unable to climb much above the 21 day moving average. This left behind a bearish candlestick to start the week off.
Meanwhile the Upper Bollinger Band is rapidly falling and the Lower Bollinger Band is rising which should end up in a Bollinger Bands Squeeze. At present there is no clear indication which way the Squeeze will send the index.
The 21 day moving average which fell below the 50 day last week, continued to move lower on Friday and the SPX closed at the 21 day. This remains a bearish signal.
The 100 and 200 day moving averages are continuing to turn lower. This also is bearish.
To start the week off, bearish signals are more dominant in the index chart which is signaling that the week may start off choppy and lower.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative. Momentum has not been positive since Sep 8. This is a full month of negative momentum.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thu Sep 9. On Friday the down signal was almost gone.
- 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 but positive.
- 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 is rising higher.
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 slipping lower.
- 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:
4550 is resistance
4525 is resistance
4500 is resistance
4490 is resistance
4475 is resistance
4450 is resistance
4400 is resistance
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
4150 is light support
4100 is good support
Stock Market Outlook for Tomorrow – Mon Oct 11 2021
Monday has a mixed outlook. MACD is almost set to turn positive and issue an up signal. If it does issue this on Monday, I plan to stay cautious for a few days.
Other signal are also pointing up such as the Slow Stochastic and the rate of change. However the other signals are mixed with most showing weakness again building.
The poor showing on unemployment numbers shook investors and show that the recovery is either going to take longer, or as some discussed on Friday, is actually slowing.
Whatever the case Monday promises to be choppy, with a chance for a bounce but also more weakness. This is an important week as investors get earnings from the banks and that could either assist stocks in moving higher, or if any of the banks miss or show problems, could send stocks lower. I am not expecting any surprises from the banks and will be trading them just before earnings and again right after earnings. For Monday then, watch for choppy action with a bias more sideways than up or down but the bullish bias is still with investors.