Stock Market Outlook for Tue Aug 17 2021 – Choppy, Overbought With Dips Likely But Higher

Mon Aug 16 2021 saw the morning dip that was expected but as the index slipped to 4440, buyers showed up and the index moved higher from 11:00 right into the close.

This setup another new all-time high for the S&P and a gain of 11 points to end the day at $4479.71.

Let’s look at the closing technical indicators from Monday to see what to expect for Tue Aug 17 2021.

Stock Market Outlook Chart Comments At The Close on Mon Aug 16 2021 

On Monday the S&P closed higher again, pushing up 11 points to end at 4479, a new all-time high. This higher close on Monday left behind a bullish candlestick for Tuesday. The candlestick though is typically seen a day before an up day and then a down day. They would mean Tuesday is higher but Wednesday is lower.

However the Lower Bollinger Band is stalling and starting to turn sideways but still below the 50 day moving average.  The Upper Bollinger Band is continuing to rise. This is a bullish signal for the index but the Lower Bollinger Band may be signaling some weakness to come.

All the major moving averages are still climbing which is bullish. For Tuesday only the Lower Bollinger Band is possibly bearish in the SPX chart.

Stock Market Outlook review of Mon Aug 16 2021

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 Thursday Aug 12 2021. On Mon Aug 16 2021 the up signal moved higher.

• 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 and is overbought..

• 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 very weak up signal in place and is 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 rising and and signaling 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:

4475 is resistance

4450 is resistance

4400 is light support

4370 is 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

4070 is light support

4050 is light support

4000 is good support

3900 is support

3850 is support

3800 is support

3750 is good support

3700 is light support

3680 is light support

3600 is strong support

 Stock Market Outlook for Tomorrow – Tue Aug 17 2021 

For Tue Aug 17 2021, the SPX technical indicators are signaling that the index is still overbought.

Note as well how there are no down signals. Almost always when all the technical indicators are pointing higher, we will see the index slip.

The closing candlestick is indicating we should expect a higher close on Tuesday but some weakness for Wednesday and a potential for a lower close.

The biggest concern for Tuesday is the very overbought market, a Lower Bollinger Band that is no longer falling which usually signals a potential change and a candlestick warning the index is due for a down day soon.

Tuesday could end higher. If it does, watch for Wednesday to end lower. Overall I am expecting a choppy day with dips again, but still a potential for buyers to snap up shares when stocks dip again on Tuesday morning.

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