Stock Market Outlook for Thu Oct 14 2021 – Weakness But Higher Close Expected

Stock Market Outlook weakness but higher close

Wednesday’s market dipped down to the 100 day moving average shortly after 10:00 AM and bounced. The bounce lasted all day and dragged in a few more buyers on the way up.

The close saw the index off the high but not by much. The SPX closed up 13 points at 4363. The NASDAQ closed up 105 points to 14571.

Let’s review Wednesday’s closing technical indicators to see what to expect for Thursday.


Stock Market Outlook Chart Comments At The Close on Wed Oct 13 2021 

In the chart below you can see the candlestick fell to the 100 day and bounced back. This left behind a bullish candlestick for a further advance on Thursday.

The SPX closed below the 50 and 21 day moving averages but above the 100 day.

Meanwhile the Upper Bollinger Band is back falling along with the Lower Bollinger Band. This is bearish.

The 21 day moving average which fell below the 50 day last week, is continuing to fall and is now below the 4400 level. The 50 day is also falling. This is bearish.

The 100 and 200 day moving averages are continuing to turn lower as well. This also is bearish.

For Thursday the signals are still dominantly bearish but the bounce off the 100 day is a good signal and the closing candlestick is bullish. Thursday should be higher.

Stock Market Outlook review of Wed Oct 13 2021

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising and back positive. This is the first positive reading since September 8 and could signal further advances.

  • Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thu Sep 9. On Wednesday we finally got an unconfirmed up signal.

  • 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 and negative.

  • 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 is falling.

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 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:

4550 is resistance

4525 is resistance

4500 is resistance

4490 is resistance

4475 is resistance

4450 is resistance

4400 is resistance

4370 is light support

4350 is light support

4300 is light support

4290 is light support

4270 is light support

4250 is good support

4225 is light support

4200 is good support

4175 is light support

4150 is light support

4100 is good support


 Stock Market Outlook for Tomorrow – Thu Oct 14 2021 

Wednesday’s close was at 4363, just 7 points below the 4370 level which is still support. It should be an easy move to push above this to perhaps 4375.

Two technical indicators are important for Thursday. Momentum finally turned positive on the index. This is the first positive signal since September 8. The second is an unconfirmed up signal from the MACD technical indicator. This is the first up signal since MACD confirmed a down signal on Sept 9.

We will still see some weakness on Thursday but the outlook is improving and a move to or above 4370 is likely. I will be buying SPY calls early on Thursday. For members, check the morning Investing Strategy Notes for specific details on the SPY calls I plan to buy.

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