On Monday Dec 21, investors opened the day with a large plunge caused by nervousness over the plunge in European equities. That drop though found ready buyers and the index moved higher throughout the day, even turning positive in the mid to late afternoon. The closing price for S&P 500 Index was $3694.92 lower by just 0.39%.
Stock Market Outlook Chart Comments At The Close on Mon Dec 21 2020
Monday saw a close just below the 3700 valuation. The closing candlestick on Monday is bearish for Tuesday.
The Upper Bollinger Band is turning higher and the Lower Bollinger Band is also turning back up and heading higher. This is keeping the Bollinger Bands Squeeze in play.
All the major moving averages are still rising which continues to suggest that new highs lie ahead for this week. The index today though, fell below the 21 day moving average near the open which is the first break below the 21 day moving average since October 26.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and is nearing a negative signal.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a a down signal on Dec 10. The down signal was stronger on Monday.
- 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.
- 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. It is 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.
- 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:
3700 is resistance
3600 is light support
3550 is support
3500 is support
3450 is support
3400 is support
3375 is support
3300 is support
3275 is support
3200 is support
3150 is support
3050 is support
3000 is support
Stock Market Outlook for Tomorrow – Tue Dec 22 2020
On Monday the technical indicators by the close had moved back to a bias lower. The Ultimate Oscillator however was rising dramatically thanks to the bounce off the early morning plunge.
For Tuesday, stocks will still see some weakness. However news of the stimulus bill being passed Monday evening, may assist investors in pushing stocks a bit higher.
The technical indicators are warnings of weakness for tomorrow but the potential is still there for a higher close and a positive one.