I had expected a bounce attempt on Friday and then a move lower. The market instead opened higher, tried to build on the morning open, failed and saw the index slip well beyond two support levels, 4500 and 4475. The day ended with the index down 34 points at 4458 but from the high to the low the index lost 62 points intraday. The NASDAQ lost 132 points to end the day at 15115. A move below 15,000 looks probable and would not be unusual as the index has continued to have trouble at the 15000 valuation since July.
One other important event on Friday was a down signal confirmation by the MACD technical indicator. The down signal was very strong at minus 6.13. The only good news is the drop was overdone on Friday and the index should attempt a bounce on Monday, possibly early morning.
Let’s review the technical readings from Friday’s close and see what to expect for Monday.
Stock Market Outlook Chart Comments At The Close on Fri Sep 10 2021
The Lower Bollinger Band is still climbing higher which is bearish. The Upper Bollinger Band is falling on Friday which is also bearish.
The 21 and 50 day moving averages are also dipping lower which is bearish.
The closing candlestick on Friday is bearish and with the index below the 21 day, a dip down to the 50 day is more likely. At the same time, the closing candlestick is also indicative of a potential bounce on Monday or if not then, on Tuesday.
Only the 100 and 200 day moving averages are climbing. For Monday the SPX chart has slipped into a bearish stance.
Stock Market Outlook review of Fri Sep 10 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 Thu Sep 9. On Fri Sep 10 the down signal issued a strong confirmation to the downside.
- 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 and on the verge of entering oversold readings.
- 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 is no longer 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 into oversold readings which often leads to a bounce.
- 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:
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
3700 is light support
3680 is light support
3600 is strong support
Stock Market Outlook for Tomorrow – Mon Sep 13 2021
For Monday the S&P is facing a technical down signal from the MACD indicator.
The signal down was strong on Friday by the close and the Relative Strength Index (RSI) enter into oversold readings. Often this means we should expect a bounce back.
There are no technical indicators on Friday pointing to a potential upturn in the index to start the week. That means, any bounce on Monday will be suspect but in the market throughout 2021, down signals have always been opportunities to setup more trades. Monday looks like it will be another chance to setup trades. A bounce is expected followed by a bit more downside. A move to the 50 day is more likely on Monday or Tuesday and that could set the index up for a stronger bounce higher. Monday though looks set to end lower, even if only slightly, while Tuesday could see a better move to the upside.
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