On Friday the market reacted negatively to the news of President Trump testing positive for Covid-19 and what initially many investors thought were lower than expected jobs numbers.
As the day progressed many investors saw that once government jobs were removed, the private sector added over 800,000 jobs and August’s numbers were revised higher.
With a further decline in the overall unemployment rate, investors took advantage of the decline and bought back into stocks although many shed some of the high flying NASDAQ stocks.
The end of the day saw the NASDAQ down almost 1% to 3348.44 but still hanging onto the important 3350 level.
Stock Market Outlook Chart Comments At The Close on Fri Oct 2 2020
On Friday the index moved lower and closed below both the 50 day and 21 day moving averages. Most important on Friday was the 21 day falling below the 50 day giving the S&P another down signal.
As well the Lower Bollinger Band rose still higher and reached the 100 day moving average which is also bearish as the Lower Bollinger Band is rapidly falling and looks set to push the index into a Bollinger Bands Squeeze at the start of the week.
The closing candlestick was another reversal which could signal either a move lower on Monday or a bounce up on Tuesday.
The 200 day moving average is still climbing but the 100 is starting to turn lower. There are still 6 up signals and now 4 down signals. The SPX chart is bearish.
Stock Market Outlook review of Oct 2
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising 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 Oct 1. On Friday that up signal was 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 falling.
- 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 still 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 falling.
- 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 back 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:
3600 is resistance
3500 is resistance
3450 is resistance
3400 is resistance
3375 is resistance
3300 was 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 5 2020
For Monday the market could try to stage a rally especially if the President returns to the White House. This is what the closing candlestick on Friday was advising.
The technical indicators are divided with most pointing lower for Monday but two important indicators, MACD and Slow Stochastic showing up signals.
Technically though the chart looks weaker for Monday with a chance for a lower close. Any good news from the President’s condition could assist stocks in trying to move back above 3350.
For Monday then we have a choppy outlook with a bias to end the day lower.
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