Friday saw a choppy day of trading. The morning saw the market make a new intraday high of 4559 and then fall 35 points to 4524 late morning. That was the deepest dip in 3 days and it brought in buyers who pushed the index back to close down just 4.88 points at 4544.
The NASDAQ closed down 125 points but still closed above 15,000 at 15090.
Let’s review the closing technical readings from Friday Oct 22 to see what is in-store for Monday Oct 25, the start of the final week of October.
Stock Market Outlook Chart Comments At The Close on Fri Oct 22 2021
The index closed just below the Upper Bollinger Band which signals an overbought market again for the start of the week.
Friday’s closing candlestick is signaling a neutral start for Monday.
The Upper Bollinger Band is still rising and the Lower Bollinger Band is still falling, both of which is bullish.
The 21 day moving average which fell below the 50 day last week, is still turning higher and could cross above the 50 day shortly. This is bullish.
The 50 day is also turning higher as is the 100 and 200 day moving averages. This is bullish.
For Monday only the overbought signal and neutral candlestick are bearish.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is unchanged and 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 Wed Oct 13 2021 . On Fri Oct 22 the up signal was still strong indicated more upside ahead.
- 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 falling and signaling overbought.
- 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 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 falling and still 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 falling for a second day.
- 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 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
4150 is light support
4100 is good support
Stock Market Outlook for Tomorrow – Mon Oct 25 2021
For the start of the week, Monday may start with a dip. If not at the open, watch for it in the morning. The technical signals are showing stocks are still overbought but MACD and momentum are indicating continued strength to the rally. That means any dip on Monday is an opportunity for setting up more trades.
The end of the day should be higher but even a small loss won’t break the strength of the uptrend at this point. We will see new highs in the S&P this week. On any dip on Monday I will be buying SPY calls to sell in an anticipated spike higher later in the day.