Stock Market Outlook for Tue Aug 24 2021 – Choppy, Dips Likely But Higher Close

Mon Aug 23 2021 saw the markets roar higher on the back of the FDA approval of Pfizer’s Covid-19 vaccine. The S&P rose 37 points to 4479 but intraday the index reached 4489, a new all-time high.

The NASDAQ rose 227 points to 14,942 and intraday it made a new high, reaching 14963.

Let’s review Monday’s close to see what technical changes occurred and what investors should expect for Tuesday.

Stock Market Outlook Chart Comments At The Close on Mon Aug 23 2021 

The most important signal in the chart is the Bollinger Bands Squeeze. You can see in the squeeze that on Thursday last week when the index touch the Lower Bollinger Band, it has risen each day until today, when it closed at the Upper Bollinger Band. This is bullish and equally important, it keeps alive the dip buying that has dominated the market all year. You can see in the chart below the same pattern from June and July dips. At some point the dip buying will not work but for now the dip buying continues to be highly profitable.

On Monday the S&P closed above the 21 day moving average which is also bullish and it left behind a bullish candlestick for Tuesday..

All the major moving averages are still climbing which is bullish. For Tuesday the SPX chart remains bullish. We should see the Bollinger Bands Squeeze end this week with the Lower Bollinger Band falling back below the 50 day and the Upper Bollinger Band moving higher.

Stock Market Outlook review of Mon Aug 23 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 a down signal on Wednesday Aug 18. On Monday the down signal lost half of its 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 trending sideways.

• 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 strong up signal in place.

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 falling indicating we should not expect prices to rise as strongly as we saw on Monday.

• 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:

4490 is resistance

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 24 2021 

For Tue Aug 24 2021 the technical indicators are mixed again.

MACD lost half of the down signal and the Slow Stochastic has issued an up signal at the close. The remaining indicators are pointing sideways or unchanged and up. The Rate Of Change is advising that investors should not expect another big rally day on Tuesday.

The index closing at the Upper Bollinger Band is important and signals that Tuesday will be choppy and will see some consolidating. The close though should see a small gain. Dips on Tuesday, are opportunities to setup more trades.

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