Wednesday saw the S&P open lower, then trade in a choppy sideways trend until late afternoon when sellers took over and pushed the index to close down 23 points to 4551. All the action came in the final hour and a half of trading and volumes rose during the selling.
The NASDAQ closed virtually unchanged although during the day it was higher, reaching 15364 just 39 points from the all-time high. The end was flat with a close at 15,235.
Let’s review the closing technical readings from Wed Oct 27 2021 to see what is in-store for Thu Oct 28 2021, the second last trading day of October.
Stock Market Outlook Chart Comments At The Close on Wed Oct 27 2021
The index closed below the Upper Bollinger Band for a fourth day.
Wednesday closing candlestick is bearish and signaling a probable bounce to start the day but a high probability of another lower close.
The Upper Bollinger Band is still rising which is bullish and the Lower Bollinger Band is turning sideways which is neutral.
The 21 day moving average which fell below the 50 day last week, is still turning higher and could cross above the 50 day shortly. This is bullish.
The 50 day is also turning higher as is the 100 and 200 day moving averages. This is bullish.
For Thursday there are two signals in the chart of concern. The bearish candlestick and the sideways turn of the Lower Bollinger Band. The rest of the chart remains bullish.
Stock Market Outlook review of Wed Oct 27 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling 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 was again still strong but slipped for a fifth straight day.
- 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 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 falling and only slightly 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 indicating we will see further changes in prices on Thursday, either higher or lower.
- 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:
4600 is resistance
4550 is resistance
4525 is resistance
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
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
4175 is light support
Stock Market Outlook for Tomorrow – Thu Oct 28 2021
On Wednesday the SPX ended the day at the resistance level of 4550. This could be a retest as stocks look for support. At the same time, normally after the index closed at the low today, we should expect a bounce at the open on the following day. That said, the signals are advising there is still another day of potential weakness. That could mean the index will slip to 4525 which is also resistance. That would be a retest before a more sustained bounce higher.
All the technical indicators are showing weakness, which almost always means we should expect a bounce or pop of some kind on Thursday. The Rate Of Change rose on Wednesday which usually signals investors should expect some price movement in stocks and not a choppy sideways day.
For Thursday then, the probability is high the day will start with a bounce attempt. If that fails to hold the index could slip toward 4525 and then attempt another bounce. This would retest both 4525 and 4550 to see if support can be found which would turn these resistance levels into support bands. By the end of the day though, the SPX may be lower for a second day which could set up Friday for a better bounce.
Stock Market Outlook Archives
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