Stock Market Outlook for Tue Feb 9 2021 – Up Signal Confirmed

 

Monday saw the S&P open above 3900. The index fell back mid-morning to below 3900 but buyers used every dip during the day to snap up stocks. The afternoon saw a rally to another new high with the index closing at 3915.59 up 28 points for a 0.74% gain.

The NASDAQ also soared higher rising almost a full percent and closing at 13,987.64 within just 13 points from 14,000.

Both indexes saw  heavy buying and a close at the high normally results in some weakness the following morning. Let’s look at Monday’s close to review the technical indicators for Tuesday.


Stock Market Outlook Chart Comments At The Close on Mon Feb 8 2021 

The S&P moved higher again on Monday and closed at the Upper Bollinger Band. This left a bullish candlestick for Tuesday and you can see in the chart that the Upper Bollinger Band is continuing to rise while the Lower Bollinger Band is starting to fall. This is bullish for further advances in the index.

The 21 day moving average is rising and is above the 3800 valuation. The 200, 100 and 50 day moving averages are still climbing with the 100 day moving average now above the 3600 valuation and the important 200 day moving average at 3450. These are strong indicators the market will continue to push to new highs this week.

Tuesday should start with a dip based on the closing candlestick with both indexes closing at the day’s high. That dip will be quickly bought into and the index will move higher. The chart is very bullish.

Stock Market Outlook review of Mon Feb 8 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 Fri Feb 5 2021. On Mon Feb 8 2021 the up signal was 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 near overbought but has turned sideways indicating not a lot of upside is expected on Tuesday.

  • 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 very overbought. There is still room to move higher but the readings are signaling some weakness should be expected.

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 and has moved into overbought 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 moving lower which indicates prices are not expected to climb much on Tuesday.

  • 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:

3900 is resistance

3850 is support

3800 is support. The 21 day moving average is just above 3800 at present.

3750 is support and where the 50 day moving average is at present.

3700 is light support

3600 is strong support and where the 100 day moving average is at present

3550 is support

3500 is strong support

3450 is support and where the 200 day moving average is at present. A drop this low would represent an 11% correction.


 Stock Market Outlook for Tomorrow – Tue Feb 9 2021 

For Tuesday technical indicators are again bullish but there are some overbought signals to contend with.

The closings on both the NASDAQ and SPX were at the day’s high on good volume. Usually we will see the index slip back early morning after this type of closing. In the present market however buyers are using every dip to jump into more stocks and more trades. Any dip then will be short-lived on Tuesday.

We could see a bit choppier day on Tuesday if the Rate Of Change is correct. Prices may rise but not as much as we have previously seen and dips back to 3900 and possibly even below could occur although buyers would appear quickly if that happened.

MACD confirmed Friday’s up signal, on Monday at the close. With all signals supporting the market move higher, I will be taking advantage of all dips on Tuesday to enter into more trades. The close will be higher.


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