Stock Market Outlook for Mon Oct 26 2020 – Dips To Start Week But Higher Close

Dips To Start Week But Higher Close

On Friday markets spent much of the day in a sideways pattern but with a bias higher. The index fell to 3440 during the day but that brought in buyers and the close ended higher up 11 points to close at 3465. This was the second straight day with a close above 3450.


Stock Market Outlook Chart Comments At The Close on Fri Oct 23 2020 

The two most important things in Friday’s SPX Chart is the continued rise of the 21 day moving average above the 50 day which normalizes the chart back to a bullish stance and the Lower Bollinger Band now reaching the 100 day which increases the likelihood of a Bollinger Bands Squeeze this week.

The closing candlestick on Friday is bullish for Monday.

The 200, 100, 50 and 21 day moving averages are climbing which is bullish.

The index still looks bearish but bullish strength is re-emerging and any positive news on the next covid-19 stimulus bill is sure to send the index back to the September highs.

Stock Market Outlook review of Fri Oct 23 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is falling and has turned negative.

  • Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Oct 1. On Thursday MACD issued a new unconfirmed down signal. On Friday the down signal was still very weak an negative 0.36 which means the down signal from Thursday is not confirmed.

  • 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 which is bullish.

  • 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 to start the week.

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.

  • 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 moving sideways unchanged.

  • 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:

3600 is resistance

3500 is resistance

3450 is support

3400 is support

3375 is support

3300 is support

3275 is support

3200 is support

3150 is support

3050 is support

3000 is support

2975 is light support

2950 is light support

2900 is light support


 Stock Market Outlook for Tomorrow – Mon Oct 26 2020 

To start the final week of October, Halloween Week, the SPX chart has returned to a more bullish stance. The move higher by the 21 day moving average returns the chart to a more normalized structure which is bullish. A Bollinger Bands Squeeze is coming this week but it could be positive.

As well, the technical indicators have also shifted and taken on a bullish stance. The Rate Of Change is virtually unchanged from Thursday which signals that a drop should not be expected. MACD still has a weak but unconfirmed down signal and momentum has slipped to negative. Both of these point to dips likely for Monday, but those dips are opportunities to setup trades.

The other technical indicators, especially the Slow Stochastic with an up signal, Relative Strength Index (RSI) climbing and the Ultimate Oscillator climbing, indicate Monday will end the day positive.

The market is still being held hostage to the stimulus bill debate. Positive news will send the index higher. Negative news will turn what should be a positive day on Monday, to a negative close.


Stock Market Outlook Archives

Morning Investing Strategy Notes
For FullyInformed Members here are the morning investing strategy notes for Tue Nov 24 2020 before markets resume. The morning notes for today cover a ....... Read More
Stock Market Outlook Higher Still
Monday saw the index continue the advance as further positive vaccine news embolden investors further. The index closed up 20 points, recovering from an early ....... Read More
Morning Investing Strategy Notes
For FullyInformed Members here are the morning investing strategy notes for Mon Nov 23 2020 before markets resume. The morning notes for today cover a ....... Read More
Stock Market Outlook - sideways slight bias up
The outlook for the S&P on Friday was mixed with a stronger case for a negative day than a positive one. However most important was ....... Read More
Morning Investing Strategy Notes
For FullyInformed Members here are the morning investing strategy notes for TFri Nov 20 2020 before markets resume. The morning notes for today cover a ....... Read More
Stock Market Outlook - Mixed
On Thursday stocks were having a tough day as they continued to see weakness until in the afternoon, news of a possible Covid-19 stimulus before ....... Read More
Weakness Dips Likely
On Wednesday investors continued to sell out of positions and the S&P lost 1.16% to end the day at 3567.79, closing below the important 3600 ....... Read More
Morning Investing Strategy Notes
For FullyInformed Members here are the morning investing strategy notes for Thu Nov 19 2020 before markets resume. The morning notes for today cover a ....... Read More