On Monday markets reacted positively to the news of President Trump’s progress and the potential for an agreement of some sort for another stimulus package. In the afternoon, word that the President was to return to the White House sent the indexes high. The close saw them at their highs of the day. The S&P closed up 60 points for the biggest one day move since September 7. It closed at 3408. The NASDAQ jumped 257 points to close at 11,332.
Stock Market Outlook Chart Comments At The Close on Mon Oct 5 2020
On Monday the index closed above both the 21 and 50 day moving averages. The closing candlestick was bullish for Tuesday.
As well note how both the Upper Bollinger Band and Lower Bollinger Bands turned sideways after the big up day on Monday. Often this indicates the Bollinger Bands Squeeze will not occur.
The 200 day moving average is still climbing but the 100 is starting to turn lower. There are still 6 up signals and 4 down signals. The SPX chart is turning back to bullish.
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 Monday the up signal was stronger again.
- 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.
- 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 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 rising sharply.
- 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 – Tue Oct 6 2020
For Tuesday the S&P could see some weakness after the strong rally on Monday but any dips won’t last long.
The technical indicators have all turned higher indicating that investors should see a higher close on Tuesday.