Friday saw buyers take a breather with the SPX up 6 points by the end of the day closing at 4455 for another positive week. It was a wild week for stocks with the bears predicting a gloomy 20% correction coming when stocks collapsed on Monday. But by the end of the week, all three indexes were higher thanks in no small part to the Fed announcement on Wednesday of no rise in interest rates and a continuation of liquidity in the markets for the near future. That brought buyers out for the remainder of the week and sent the bears back once more, to their caves for yet another hibernation.
Let’s look at the closing technicals from Friday to see what we should expect for Monday to start the final week of September.
Stock Market Outlook Chart Comments At The Close on Fri Sep 24 2021
On Friday, the index dipped slightly below the 50 day moving average but closed above it. The index though was still below the 21 day moving average by the end of the day. The closing candlestick is bullish but continues to advise investors to expect some dips. The biggest concern in the chart at present is the 21 day is still falling and could move below the 50 day this week unless the index can push back above the 21 day and keep climbing. That could be a tall order to fill to start the week. A dip below the 50 day by the 21 day would issue a new down signal for the SPX. This is at present a cautionary outlook.
The Upper Bollinger Band is no longer rising which is also cautionary. The Lower Bollinger Band which was falling is also stalled and starting to turn sideways. Both are cautionary signals.
As explained above, the 21 day is dipping quicker than the 50 day and may fall below it. This will also be bearish.
Only the 100 and 200 day moving averages are climbing. For Monday there are more bearish signals than bullish to start the week with a bit of caution.
Stock Market Outlook review Fri Sep 24 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and almost ready to turn positive.
- 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 continued to lose strength and it is no longer 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 back 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.
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 trending unchanged.
- 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 signaling unchanged for the start of the week.
- 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 Sep 27 2021
For Monday to start the week, investors should stay a bit cautious as we wait to see if the SPX can break and close convincingly above the 21 day moving average. The SPX need to close above 4475 to signal the trend up is still intact. Monday’s market will be important for the rest of the week. The technical indicators have shifted to more bullish but the Rate Of Change is indicating investors should not expect big changes in the price action of most stocks on the SPX. The day should be choppy again, with dips probably down or just below the 50 day but a close above the 21 day is expected and would support a further move higher this week. A close below the 21 day would be bearish at this stage in the 3 day rally. Monday then investors should expect choppy trading with some weakness but a higher close.
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