Stock Market Outlook for Thu Nov 12 2020 – Overbought, dips Likely, But Higher Close

The S&P closed higher on Wednesday with a gain of 27 points to end the day at 3572.

The NASDAQ rose 232 points, closing at 11,786.

Let’s look at the closing technical indicators from Wednesday to see if the rally can continue Thursday.

Stock Market Outlook Chart Comments At The Close on Wed Nov 11 2020 

Wednesday saw the index trade all day below the Upper Bollinger Band. The closing candlestick is bullish for Thursday but also signaling that the market is a bit overbought for a third day.

The Upper Bollinger Band is still rising above 3600 and the Lower Bollinger Band is falling indicating there is more upside ahead. The 21 day, 50 day, 100 and 100 day moving averages are all rising, a bullish sign.

The up signal from Oct 21 is still in play, and the chart remains bullish.

Stock Market Outlook review of Wed Nov 11 2020

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 Nov 5. On Wednesday the up signal was very 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 has a a down signal in place and is 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 rising and overbought.

• 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:

3600 is resistance

3550 is resistance

3500 is support

3450 is support

3400 is support

3375 is support

3300 is support

3275 is support

3200 is support

3150 is support

3050 is support

3000 is support

 Stock Market Outlook for Tomorrow – Thu Nov 12 2020 

For Thursday the S&P could dip again as it remains overbought but the outlook is still bullish for another day of gains.

Any dips at this point are opportunities to setup more trades. The index will revisit 3600 either Thursday or Friday.

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