Wednesday saw markets struggle but the Fed report at 2:00 PM helped to put a floor under the market and the day ended slightly higher with a close up 6 points at 3701.
Stock Market Outlook Chart Comments At The Close on Wed Dec 16 2020
Wednesday saw the SPX hold above the 21 day moving average. The closing candlestick was bearish for Thursday but the Lower Bollinger Band started to dip lower on Wednesday which could signal the next move will be higher for the S&P.
All the major moving averages are still rising which continues to suggest that the weakness we are seeing won’t last.
Stock Market Outlook review of Wed Dec 16 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is moving sideways and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a a down signal on Dec 10. The down signal was weaker on Wednesday.
- 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. It is not 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 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 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:
3700 is resistance
3600 is light support
3550 is support
3500 is support
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
Stock Market Outlook for Tomorrow – Thu Dec 17 2020
On Wednesday the S&P regained the 3700 valuation which is bullish.
For Thursday the technical indicators have shifted and most are now pointing higher. MACD is losing the sell signal while the Slow Stochastic has a new up signal in place for Thursday. We will probably see some dips below 3700 on Thursday but as long as the covid-19 stimulus bill gets further traction on Thursday, the index will end the day higher. Any bad news on the Covid-19 bill will of course see stocks dip but that seems unlikely at present. Some form of stimulus appears certain.
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