Stock Market Outlook for Thu Nov 4 2021 – Morning Dip At Open But Higher Close

Wednesday saw a sideways day until the Fed announcement at 2:00 PM. That created a rally which added 30 points to the S&P and a new closing high of 4660.

The NASDAQ also saw another new closing high, reaching 15,811.58 after rallying 162 points.

The Dow Jones rose 105 points closing at 36,157 a new closing higher and intraday reaching 36,178.

All of this was on the back of the Fed’s announcement of the beginning of reduction in bond purchasing but no interest rate increases this year and probably not until summer next year at the earliest. There were many analysts who declared there wouldn’t be any interest rates until after the fall elections of 2022. Whatever the case, investors liked what they heard and markets ended considerably higher.

Let’s review the close on Wednesday to see what’s in store for Thu Nov 4 2021.

Stock Market Outlook Chart Comments At The Close on Wed Nov 3 2021 

The index closed below the Upper Bollinger Band for a ninth day but higher which left behind a bullish candlestick for Thursday. .

The Upper Bollinger Band is still rising which is bullish. The Lower Bollinger Band is back turning higher. This is bearish.

The 50, 100 and 200 day moving averages are all climbing. This is bullish.

For Thursday the chart is dominantly bullish except for the Lower Bollinger Band and that could easily change if the index keeps rising.

Stock Market Outlook review of Wed Nov 3 2021

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is unchanged 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 Wed Oct 13 2021 . On Wednesday the up signal gained strength for the first session in the last eight.

• 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 down signal in place and still very 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 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:

4655 is resistance

4600 is resistance

4550 is light support

4525 is light support

4500 is support

4490 is support

4475 is support

4450 is support

4400 is support

4370 is light support

4350 is light support

4300 is light support

 Stock Market Outlook for Tomorrow – Thu Nov 4 2021 

The technical signals for Thursday are more bullish. There are though still overbought signals but investors continue to place capital into stocks, pushing them higher keeping the overbought signal in check.

MACD on Wednesday finally gained strength after declining for 8 straight days which is quite bullish.

The strong close on Wednesday should set up Thursday morning for a dip but with the bias still up, the close should be higher.

The rally on Wednesday was a bit ahead of itself after the Fed’s announcement. The index moved quickly from 4635 to 4655 before closing at 4660. A dip on Thursday morning could take the index back to 4640 or possibly 4635 before moving back up. A dip that low and I will be buying SPY calls again, using November 12 expiry.

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