Stock Market Outlook for Tue Feb 23 2021 – Unconfirmed Down But Bounce Ahead

Monday saw stocks move lower with the S&P ending the day down 30 points to 3876. The NASDAQ though saw a decline of 341 points to close at 13,533 for a drop of 3.5%.

Stock Market Outlook Chart Comments At The Close on  Mon Feb 22 2021 

The S&P closed at the low of the day and at 21 day moving average breaking below 3900. The closing candlestick is bearish for Tuesday but is also typical of a bounce, especially with the close at the 21 day moving average.

The Upper Bollinger Band is continuing to rise. The Lower Bollinger Band is turning back up. For this week we need to watch to see if the Upper Bollinger Band turns lower and the Lower Bollinger Band moves back above the 50 day. Those would be sell signals.

The 21 day moving average is starting to dip. The 200, 100 and 50 day moving averages are still climbing. A break below the 21 day moving average should it occur on Tuesday will setup the index to fall to the 50 day which is 76 points lower at 3800.

Stock Market Outlook review of Mon Feb 22 2021

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is falling and has turned negative.

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

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Fri Feb 5 2021. On Monday we received an unconfirmed down signal. A lower close on Tuesday will see this down signal get 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 falling.

• 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 and is still 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 and at 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:

4000 is resistance

3900 is resistance

3850 is support.

3800 is support.

3750 is support

3700 is light support

3600 is strong support

3550 is support

3500 is strong support

3450 is support. The 200 day moving average is just above this valuation. A drop this low would represent an 11% correction.

 Stock Market Outlook for Tomorrow – Tue Feb 23 2021 

The big technical event on Monday at the close was the new down signal from the Moving Average Convergence / Divergence (MACD) technical tool. This is unconfirmed but the signal was strong by the close of the day.

At the same time there are some readings that the index is already reaching an oversold environment which normally results in a bounce. The index closed a the 21 day on Monday and the closing candlestick often signals a bounce before more selling.

On Tuesday then, watch for a potential bounce and then more selling taking the index probably to test the 3800 level this week.

Stock Market Outlook Archives

Stock Market Outlook for Tue Apr 23 2024 – Bounce But Lower

Prior Trading Day Summary: Monday saw the long awaited bounce from the recent selling and market breadth was bullish. The SPX rose 43 points recovering all of Friday's loss to ....... Read More

Morning Investing Strategy Notes for Mon Apr 22 2024

For FullyInformed Members the morning Investing Strategy Notes for Mon Apr 22 2024 discuss the outlook for the start of the fourth week of April. There are also comments on ....... Read More

Stock Market Outlook for Mon Apr 22 2024 – No Change – Deeply Oversold Bounce Possible

Prior Trading Day Summary: Friday saw stocks open flat and try to climb within the first 15 minutes. When that failed the selling continued. The early afternoon saw a rally ....... Read More

Morning Investing Strategy Notes for Fri Apr 19 2024

For FullyInformed Members the morning Investing Strategy Notes for Fri Apr 19 2024 discuss the outlook for for a potential bounce that ends the day with the indexes positive. There ....... Read More

Stock Market Outlook for Fri Apr 19 2024 – Deeply Oversold – Bounce Likely – Higher Close

Prior Trading Day Summary: Thursday saw another morning bounce attempt but no follow through. However the SPX did not break below 5000 and managed to close at 5011 although minutes ....... Read More

Morning Investing Strategy Notes for Thu Apr 18 2024

For FullyInformed Members the morning Investing Strategy Notes for Thu Apr 18 2024 discuss the outlook for Thursday and a possible bounce or a move lower. There are trade ideas ....... Read More

Stock Market Outlook for Thu Apr 18 2024 – Deeply Oversold – Bounce Attempt Expected

Prior Trading Day Summary: Wednesday saw a bounce attempt at the open which managed to reach 5078 before selling once again pushed stocks lower. By 12:45 stocks looks almost ready ....... Read More

Morning Investing Strategy Notes for Wed Apr 17 2024

For FullyInformed Members the morning Investing Strategy Notes for Wed Apr 17 2024 discuss the outlook for a potential bounce on Wednesday. There are trade ideas outlined in Las Vegas ....... Read More

Stock Market Outlook for Wed Apr 17 2024 – Another Bounce Attempt

Prior Trading Day Summary: Tuesday found stocks stuck in a fairly tight trading range as investors remain worried about a potential Israeli retaliatory strike against Iran and what might be ....... Read More

Morning Investing Strategy Notes for Tue Apr 16 2024

For FullyInformed Members the morning Investing Strategy Notes for Tue Apr 16 2024 discuss the outlook for stocks for Tuesday and the chance of a bounce. There are trade ideas ....... Read More

Stock Market Outlook for Tue Apr 16 2024 – Deeply Oversold

Prior Trading Day Summary: Monday started the day as expected with a massive rally at the open and a push higher especially when retail sales came in stronger than expected. ....... Read More

Morning Investing Strategy Notes for Mon Apr 15 2024

For FullyInformed Members the morning Investing Strategy Notes for Mon Apr 15 2024 discuss the outlook for stocks for Monday as well as the third week as a whole. There ....... Read More

Stock Market Outlook for Mon Apr 15 2024 – Expect A Bounce

Prior Trading Day Summary: On Friday investors got better than expected bank earnings but sold bank stocks lower. The selling extended into other sectors until by the close the indexes ....... Read More

Morning Investing Strategy Notes for Fri Apr 12 2024

For FullyInformed Members the morning Investing Strategy Notes for Fri Apr 12 2024 discuss the CPI numbers released on Thursday and the outlook for stocks for the remainder of the ....... Read More

Stock Market Outlook for Fri Apr 12 2024 – All About Bank Earnings

Prior Trading Day Summary: On Thursday investors got a bit of good news. First the Weekly Initial Unemployment Insurance Claims came in lower than expected at 211,000. If the weekly ....... Read More