Wed Jan 13 2021 saw An early morning dip that fell again below the 3800 valuation but it was quickly bought into and the index recovered within half an hour. By 11:00 AM the index was holding 3800 and proceeded to climb further, reaching just above 3820 mid-afternoon. The final hour saw selling return but the index still managed to close higher by 8 points to 3809.
Stock Market Outlook Chart Comments At The Close on Wed Jan 13 2021
On Wednesday the index closed below the Upper Bollinger Band and left behind a neutral candlestick for Thursday.
Both the upper and lower bands continue to separate and the Lower Bollinger Band is further below the 50 day moving average. The Upper Bollinger Band is continuing to rise.
The major moving averages are still rising and the up signal from Oct 21 is still in play. Despite the three straight bearish candlesticks earlier and a neutral one on Wednesday, the chart remains 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 Dec 7. On Wednesday the up signal was a bit weaker.
- 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 moving higher.
- 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 down signal in place and is still 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 trending higher which indicates there will be further changes in prices on Thursday.
- 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:
3800 is resistance
3750 is resistance
3700 is light support
3600 is strong support
3550 is support
3500 is strong support
3450 is support
3400 is support
3375 is support
3300 is strong support
3275 is support
3200 is support
3150 is support
3050 is support
3000 is strong support
Stock Market Outlook for Tomorrow – Thu Jan 14 2021
For Thursday there is another good chance for the index to fall back below 3800 as we get bank earnings starting on Friday before the open. There is a fair amount of uncertainty facing the markets at present which means more choppy trading should be expected.
However the technical indicators are in general pointing to a higher close on Thursday. Overall then the outlook is for more sideways action but a bias to the upside continues to dominate.