Mon Dec 27 2021 saw low volume and an explosive rally. By the end of trading the S&P was up $65 points to 4791, for a new all-time closing and intraday high.
The NASDAQ rose 217 points to en d the day at 15871. 341 points below the all-time high.
Buying was steady throughout the day including the last half hour that saw a rush of buying which pushed the index to the highest close of the day.
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 Mon Dec 27 2021
The closing candlestick on Monday is bullish but signaling overbought for Tuesday. The potential for a drop from Monday’s closing high is high.
The 21 day moving average is still falling which is bearish and it is nearing the 50 day moving average.
The Lower Bollinger Band fell below the 100 day moving average on Wednesday last week and is still falling. This is bullish. The Upper Bollinger Band is rising, which is also bullish.
Meanwhile the 50, 100 and 200 day moving averages are still climbing, all of which is bullish.
For Tue Dec 28 2021 the chart is very bullish but dips should be expected in the morning.
Stock Market Outlook review of Mon Dec 27 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 Dec 23. Today the up signal received a strong confirmation.
- 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 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 an up signal in place and 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 rising 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 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:
4800 is resistance
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 28 2021
The rally on Monday pushed well beyond any support levels in the S&P. This kind of a breakout in the index is usually followed by a number of higher closes. Tuesday should start with some dips as the index is very overbought.
The technical indicators however are still pointing higher for stocks despite four straight days of rallying.
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