Sellers once again were in charge on Wednesday pushing stocks lower. Every rally was met by sellers trying to unload positions. By the close the S&P had lost 50 points to end the day at 3819, back to level seen on Monday. The index is down 3.3% from its 52 week high made on Feb 16,
The NASDAQ collapsed 361 points for a 2.7% loss and ending at 12,997. Just 10 days ago the index made a new all-time high of 14175. The index has lost 1175 points for a decline of 8.3%.
Stock Market Outlook Chart Comments At The Close on Wed Mar 3 2021
The S&P was under selling pressure right from the open again on Wednesday. Every rally was used by sellers to unload more stock. The index failed to retake the 21 day and fell below the 50 day intraday. The close was back at the 50 day moving average. This is the second time down at the 50 day within the past 3 days. In most instances where this has happened, the 50 day does not hold the second time and the index slips lower. With the Bollinger Bands Squeeze obvious in the chart below, I think the chance the SPX will bounce again on Thursday is slim. We should see it push toward the 100 day and break through the Lower Bollinger Band on Thursday.
The candlestick is bearish for Thursday.
The 21 day moving average is turning down again, while the remaining 50, 100 and 200 day moving averages are all climbing higher.
Overall the market is in trouble and a move lower appears set for Thursday.
Stock Market Outlook review of Wed Mar 3 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Mon Feb 23 2021. On Wednesday the down signal was much stronger again.
- 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 falling.
- 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 usually indicates investors shouldn’t expect a large move in prices. That is probably wrong for 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:
4000 is resistance
3900 is resistance
3850 is support.
3800 is support.
3750 is support
3700 is light support
3680 is light support – The 100 day moving average is at this valuation.
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 Mar 4 2021
For Thursday only the Slow Stochastic is pointing to the chance for the index to climb. The other indicators are bearish and MACD has a very strong down signal for the start of today.
Thursday may see an attempt to rally but overall the index looks set to open lower and fall lower. Caution is still advised.
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