Wednesday we saw another day of weakness including a test all the way down to 3900 but the close was just a loss of a point and the day ended at 3931.
Stock Market Outlook Chart Comments At The Close on Wed Feb 17 2021
The S&P closed relatively flat on Wednesday for a second day. The closing candlestick though is bearish for Thursday. What we are seeing is the market trying to consolidate recent gains before moving higher. On Thursday we get earnings from Walmart Stock (WMT). If they beat estimates, it could be a catalyst to push stocks higher during the day.
The Upper Bollinger Band is continuing to rise. The Lower Bollinger Band however is starting to turn back up. At present I am not concerned about the change in trend here for the Lower Bollinger Band but it needs to be watched as it may signal a bigger dip next week if it continues to rise.
The 21 day moving average is rising and is now at 3855. The 200, 100 and 50 day moving averages are still climbing with the 100 day moving average now at the 3660 valuation and the important 200 day moving average at 3490. These are strong indicators the market will continue to push to new highs.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and is 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 Fri Feb 5 2021. On Wednesday the up signal is showing weakness but still up.
- 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 trending sideways.
- 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 a neutral signal in place and is still very 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 moving sideways.
- 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.
- 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:
4000 is resistance
3900 is resistance
3850 is support. The 21 day moving average is presenting here.
3800 is support.
3750 is support
3700 is light support
3600 is strong support
3550 is support
3500 is strong support
3450 is support. The 200 day moving average is just above this valuation. A drop this low would represent an 11% correction.
Stock Market Outlook for Tomorrow – Thu Feb 18 2021
Walmart earnings could push stocks higher depending on if they beat estimates. The bigger the beat, the better chance for a move higher.
The technical indicators though are still advising that the market is consolidating recent gains and should move higher shortly.
For Thursday we will see dips again but a higher close is still expected.