On Wed May 5 2021 the index tried twice to rally higher but ran into sellers both times. Intraday the index fell to $4160.94 around 10:30 which sparked the best rally of the day taking the index to 4187.72. That rally ran into heavier selling especially in the final hour of the day where the S&P looked like it might revisit the morning low. Instead it closed at 4167 for a small gain of 2.93 points but, more important, still above the 21 day moving average.
Stock Market Outlook Chart Comments At The Close on Wed May 5 2021
The Upper Bollinger Band is falling and the Lower Bollinger Band is rising as the Bollinger Bands Squeeze continues. At present the outlook for the squeeze is negative but that could easily change.
The closing candlestick on Wednesday is bullish for Thursday but with the index just above the 21 day moving average, dips are likely. Note on Wednesday the index did not fall as low as it did on Tuesday.
The 21 day moving average is climbing higher and further away from the 50 day moving average which is bullish.
The 50, 100 and 200 day moving averages are all climbing higher.
Overall the S&P chart is bullish but as explained above there are more bearish signals that are warning investors to stay cautious.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is back to negative and falling.
- 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 April 30 2021. On Wednesday the signal lower was stronger.
- 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 unchanged.
- 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.
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 unchanged.
- 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 unchanged.
- 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:
4225 is resistance
4200 is resistance
4150 is light support
4100 is light support
4070 is very light support
4050 is light support
4000 is Support
3900 is support and the 50 day is just above this at 3933.
3850 is support
3800 is support and the 100 day is just above this level.
3750 is good support
3700 is light support
3680 is light support
3600 is strong support and the 200 day is just above this level.
Stock Market Outlook for Tomorrow – Thu May 6 2021
By the close on Wednesday the technical indicators had changed. Three of the indicators were pointing unchanged indicating a larger dip is not expected for Thursday. None are pointing higher however but the closing SPX candlestick for Wednesday is often associated with a rise the following day. For Thursday all of this means a choppy day with dips likely but a good chance for a higher close.