Stock Market Outlook for Tue Dec 7 2021 – Choppy Dips Likely But Higher

Monday saw all three indexes move higher with the Dow Jones adding the largest gain climbing 647 points for a 1.87% rally. The S&P rose 53 points for a 1.17% gain and the NASDAQ rising 139 points for a 0.93% gain.

The question now is whether Monday was just a bounce once again, or whether the rally can push higher this week.

To find out what the technical indicators say, let’s review Monday to see what we should expect for Tuesday.

Stock Market Outlook Chart Comments At The Close on Mon Dec 6 2021 

The candlestick on Monday at the close is bullish for Tuesday although it does also indicate there will be some dips. The index spend the day above the 50 day moving average  bullish sign.

The 21 day moving average is continuing to fall while the other remaining major moving averages, namely the 50, 100 and 200 day are still climbing. This is bullish.

The Bollinger Bands Squeeze is over and the bands are widening which at present is bearish in outlook.

Stock Market Outlook review of Mon Dec 6 2021

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising, negative and at oversold readings.

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

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Wed Nov 17 2021 . On Monday the down signal lost some strength but is still holding a very strong down signal.

• 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 and trending just above oversold readings.

• 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 for Tuesday and is still oversold.

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 awa from oversold signals.

• 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 slightly but still warns prices could fall back.

• 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:

4700 is resistance

4655 is resistance

4600 is good support

4550 is light support

4525 is light support

4500 is support

4490 is support

4475 is support

4450 is support

4400 is support

4370 is light support

4350 is light support

4300 is light support

 Stock Market Outlook for Tomorrow – Tue Dec 7 2021 

For Tuesday the technical indicators are mixed. However the Relative Strength Index (RSI) and the Slow Stochastic are pointing to a higher day as they move away from being oversold. The Moving Average Convergence / Divergence signal is however still strongly bearish.

Tuesday should see choppy trading with the SPX dipping at times but holding above the 50 day moving average. The close will be higher. Wednesday could see further selling develop but at present the outlook is for further selling to be more muted and any drops to be smaller. Right now though, Tuesday looks like another positive close after what will be a choppy session.

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