Stock Market Outlook for Tue Dec 21 2021 – Confirmed Down Signal But Bounce First

On Monday stocks tumbled right from the open. The S&P opened below the 50 day moving average and came within a couple of points of reaching the 100 day. The dip down to the 100 day brought in some buying to send the index off the lows of the day. The index closed down 52 points at 4568.

The NASDAQ opened below the 100 day and closed below it, losing 188 points to end the day at 14,980.

It was a punishing day of more losses on all the indexes and it left behind a confirmed down signal from the MACD technical indicator.

Let’s review the closing technical indicators from Monday to see what to expect for Tuesday.

Stock Market Outlook Chart Comments At The Close on Fri Dec 17 2021 

The closing candlestick on Monday is bearish but also points to a probable bounce. The index came within a couple of points of reaching the 100 day moving average. That seemed to bring buyers back to the market even if only briefly.

The 21 day moving average is still falling and the Lower Bollinger Band has reached the 100 day moving average.

Meanwhile the 50, 100 and 200 day moving averages are still climbing which is bullish.

For Tuesday stocks look set to attempt a bounce to retake the 50 day moving average. As of Monday’s close, the S&P is down just 3.7% from its 52 week high while many stocks have lost far more valuations.

Stock Market Outlook review of Mon Dec 20 2021

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is falling and negative.

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

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down up signal on Fri Dec 17 2021 . On Monday, the down signal was strongly confirmed.

• 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 unchanged which points to a probability that the sell-off was overdone on Monday.

• 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.

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 is on the edge of oversold readings.

• 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.

• 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:

4725 is resistance

4700 is resistance

4670 is support

4655 is light support.

4600 is good support

4550 is light support

4525 is light support

4500 is support

 Stock Market Outlook for Tomorrow – Tue Dec 21 2021 

For Tuesday there should be a bounce attempt as stocks are oversold following Monday’s plunge in equities.

Meanwhile the technical indicators as of Monday’s close, do not show that this rally is over. Instead they are pointing to the pullback as temporary before moving higher.

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