Wednesday saw all the indexes add on a few extra points with the S&P up 5 points to 3732.40. The index is sitting just below its 52 week high of 3756.
Stock Market Outlook Chart Comments At The Close on Wed Dec 30 2020
Wednesday saw the index once more at the Upper Bollinger Band. This left behind a bearish candlestick for the final day of the year.
The Bollinger Bands Squeeze is still in play and the bands are once again starting to turn toward each other indicating a tightening of the bands which often means a move lower will follow.
All the major moving averages are still rising which continues to suggest that new highs lie ahead for the S&P. The up signal from Oct 21 is still very much in play for the final day of the year.
Stock Market Outlook review of Wed Dec 30 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling 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 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 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 trending sideways.
- 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 31 2020
Historically the final day of the year has been negative 78% of the time since 2000.
The indicators though are mixed but most, including the closing candlestick are pointing to a sideways day ahead for Thursday.
This is a half day before New Year’s Day tomorrow. Either way, up or down, there won’t be a large move and volume will be lower.
The outlook then is more neutral but with perhaps a slight bearishness.
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