The first day of October started with a drop in the index to another new sell-off low as the S&P broke through 4300 reaching 4288 within half an hour of trading. That though seemed to finally bring in buyers. Although volumes were not the highest, buyers did pick through stocks and as the afternoon progressed, the index rose to a high of 4375 before closing at 4357, up 49 points on the day. However intraday the index move from 4288 to 4375 was a gain of 87 points which was impressive. The rally was strong but fairly straight up which means for Monday, we should expect to see some selling and even a test of the 100 day would not be out of the question.
The NASDAQ rose a more modest 118 points to close at 14566.
Let’s review the closing technical signals from Friday, to see what’s in-store to start the first week of October.
Stock Market Outlook Chart Comments At The Close on Fri Oct 1 2021
On Friday the index dropped below the Lower Bollinger Band and then climbed above the 100 day moving average. The close was above the 100 day. This left behind a bullish candlestick but also a signal that we could see a test of the 100 again on Monday before moving higher.
The Lower Bollinger Band has fallen below the 100 day and the Upper Bollinger Band is falling. Both are bearish signals.
The 21 day moving average is now below the 50 day and poised to fall still further. This is also bearish.
The 100 day moving average is turning sideways, again a bearish signal.
Only the 100 day moving average is still climbing. This is the only major bullish signal for the SPX chart for Monday.
For Monday there are far more bearish signals than bullish.
Stock Market Outlook review of Fri Oct 1 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and staying negative. It is moving away from being oversold. You can see that this is the second move up for momentum. This is somewhat bearish.
- 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 lost a bit of strength and is still oversold.
- 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 and trying to climb back from being oversold.
- 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 but it is turning higher, away from oversold readings.
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 from being oversold.
- 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 light support
4450 is light support
4400 is good support
4370 is good 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
4070 is light support
4050 is light support
4000 is good support
3900 is support
3850 is support
3800 is support
3750 is good support
Stock Market Outlook for Tomorrow – Mon Oct 4 2021
For the start of the first week of October, the index should dip back to the 100 day moving average in the morning and then continue the rally we saw Friday afternoon.
The pullback is not “out of the woods” yet but there are some signs investors may not see a dip to the 200 day moving average. For now though, investors should stay cautious and protected against a possible resumption of the downtrend.
The technical signals are a bit split with a few turning back up and signaling a further bounce is likely on Monday. The other signal though are bearish and point to a drop to at least the 100 day moving average, if not lower.
For Monday then, look for a retest of the 100 day, probably in the morning, and then another attempt to close higher than Friday’s close at 4357. The 4375 valuation had good support. We could see the index try to recover to above the valuation on Monday or Tuesday.
Stock Market Outlook Archives
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Morning Investing Strategy Notes for Tue Apr 23 2024
Stock Market Outlook for Tue Apr 23 2024 – Bounce But Lower
Morning Investing Strategy Notes for Mon Apr 22 2024
Stock Market Outlook for Mon Apr 22 2024 – No Change – Deeply Oversold Bounce Possible
Morning Investing Strategy Notes for Fri Apr 19 2024
Stock Market Outlook for Fri Apr 19 2024 – Deeply Oversold – Bounce Likely – Higher Close
Morning Investing Strategy Notes for Thu Apr 18 2024
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
