Stock Market Outlook for Tue Apr 20 2021 – Some Weakness – Bounce Likely – Higher Close

On Monday stocks finally took a breather to try to work through being extremely overbought.

The SPX slipped back to 4150 intraday but closed at 4163, down half a percent on the day.

Stock Market Outlook Chart Comments At The Close on Mon Apr 19 2021 

The Upper Bollinger Band is continuing to rise which is bullish. The index on Monday closed below the Upper Bollinger Band.

The Lower Bollinger Band is falling and and is below the 100 day moving average, a bullish signal.

The closing candlestick on Monday is bearish for Tuesday but often is accompanied by a bounce attempt.

The 21 day moving average is climbing higher away 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 very bullish and signaling overbought.

Stock Market Outlook review Mon Apr 19 2021

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is positive and falling further.

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

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Monday March 29 2021. On Monday the up signal lost a lot of strength.

• 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 moving away from an overbought signal.

• 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 to neutral signal in place and is showing the index as extremely 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 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 also rising indicating prices are going to change on Tuesday.

• 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:

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 – Tue Apr 20 2021 

In the support and resistance levels above you can see that 4150 is light support for the index. On Monday the S&P reached that level and bounced off it.

The index is still overbought but Monday’s drop helped to relieve some of the overbought pressure.

For Tuesday the index is still signaling overbought but there is a strong possibility of a bounce and then some further selling.

Dips remain opportunities to setup trades as they were on Monday. On Tuesday, the index will be testing 4150 again but a higher close is expected.

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