Wednesday saw investors continue to push stocks higher but volumes dropped and the number of stocks participating shrank.
Normally after two days of a rally from a strong sell-off, investors can expect the market to take a breather. We may see that on Thursday.
Here are the closing technical indicators from Wednesday when the S&P added another 35 points to close at 4358, just 35 points from its all-time high.
Stock Market Outlook Chart Comments At The Close on Wed Jul 21 2021
The S&P closed above the 21 day moving average. This left a bullish candlestick for Thursday.
The Upper Bollinger Band is turned lower while the Lower Bollinger Band is swinging higher and almost above the 50 day moving average. A Bollinger Bands Squeeze is underway which could swing the market either way. At present the outlook is bearish to neutral for the outcome.
All the major moving averages are still climbing which is bullish. There is a chance on Thursday the index will retest the 21 day moving average or dip near it. The chance of a bigger drop such as we saw on Monday is slim to none.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and back positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Friday July 16. On Wednesday the down signal was weaker but still reasonably strong.
- 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 still 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 falling which normally means we shouldn’t expect to see prices climb dramatically higher 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:
4400 is resistance
4370 is resistance
4350 is resistance
4300 is light support
4290 is light support
4270 is light support
4250 is light support
4225 is light support
4200 is light support
4175 is light support
4150 is light support
4100 is good support
4070 is light support
4050 is light support
4000 is good support
3900 is support
3850 is support
3800 is support
3750 is good support
3700 is light support
3680 is light support
3600 is strong support
Stock Market Outlook for Tomorrow – Thu Jul 22 2021
The technical indicators are not as mixed as they were on Tuesday. The Slow Stochastic has also shifted to an up signal and MACD has a weaker down signal in place.
Only the Rate Of Change is advising that we shouldn’t expect to see a larger move on Thursday.
Following two days of big gains, it won’t be unusual for the index to take a break. A slightly lower close could end the day on Thursday but for now, dips are still opportunities as the SPX looks positioned for an attempt to move to the all-time high.