Friday was another see-saw choppy day with the index struggling to stay above 4200. During the day the S&P traded from a low of 4203 to a high of 4218, a range of just 15 points. In the end the S&P closed at 4204 up 3 points. The NASDAQ rose only 12 points and stayed in a 73 point rang all day. The close saw the tech heavy index end the day at 13,748.
The most important event from Friday’s market was an unconfirmed up signal from the Moving Average Convergence / Divergence (MACD) technical indicator. Let’s review Friday’s closing signals to see what they are advising for Tuesday’s open.
Stock Market Outlook Chart Comments At The Close on Fri May 28 2021
The Bollinger Bands are showing some signs of losing their bullishness. Both the Lower Bollinger Band and Upper Bollinger Band are now trending sideways which often signals a change in direction is coming.
The S&P stayed above the 21 day moving average and ended above it for the fifth day on Friday. This left behind a bullish candlestick for Tuesday to start off June.
The 21 day moving average is once again falling while the 50, 100 and 200 day moving averages are also still climbing.
The chart is still mixed with once again some growing bearish signals but still a fairly bullish stance to start June.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Friday April 30 2021. On Friday a new unconfirmed up signal was generated by the close of trading.
- 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 moving sideways.
- 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 for Tuesday but the signal is weakening for a second straight day.
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.
- 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:
4250 is resistance
4225 is resistance
4200 is resistance
4150 is light support
4100 is light support
4070 is very light support
4050 is light support and where the 50 day is currently residing. This would represent a 4.4% decline.
4000 is good support
3900 is support and just below the 100 day moving average.
3850 is support
3800 is support
3750 is good support
3700 is light support and just below the 200 day moving average.
3680 is light support
3600 is strong support
Stock Market Outlook for Tomorrow – Tue Jun 1 2021
For Tuesday there are continuing signals that the market is struggling to break free of 4200 as sellers are still unloading positions. All of this is keeping the index moving more sideways than actually higher.
Weakness is building in the 20 day moving average which is slipping lower and weakness is also seen in the Bollinger Bands which are trending sideways.
The Rate Of Change is signaling lower and momentum is showing a weaker market to start the first day of the month.
Historically June has been poor for stocks but for the first trading day of June, the index has been higher 70% of the time since 1995.
Tuesday June 1 will be choppy and there will be dips but while historically there is a good chance for a higher close, it appears unlikely it will be a lot higher. If anything, the signals are advising another choppy, sideways day will start June with almost an equal chance for a lower close as for a higher one. If trying to place odds, it is more likely 60% positive close versus a 40% negative close for the first trading day of June. My bet is still on the bulls.