Stock Market Outlook for Tue Mar 16 2021 -Overbought, Dips Likely But Bullish

The S&P and Dow made new all-time highs on Monday.

The S&P rose to 3970 and closed just below it at 3968 for a gain of 25 points.

Stock Market Outlook Chart Comments At The Close on Mon Mar 15 2021 

The Bollinger Bands Squeeze widened further again on Monday. This remains bullish for the index. The closing candlestick on Monday was bullish but is also signaling we could see some dips on Tuesday.

The index is nearing the Upper Bollinger Band and the 21 day moving average is rising again.

The 50, 100 and 200 day moving averages are climbing higher.

The chart is still more bullish for Tuesday but with the Fed meeting coming up we could see some dips and volatility for Tuesday. Despite this, the chart is bullish.

Stock Market Outlook review of Mon Mar 15 2021

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 an up signal on Thursday March 11 2021. On Monday the up signal remains strong.

• 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.

• 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 a sixth straight day and is signaling 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 signaling 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 also 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:

4000 is resistance

3900 is resistance

3850 is support

3800 is support

3750 is good support and has assisted in keeping the selling in check

3700 is light support

3680 is light support – The 100 day moving average is at this valuation.

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 Mar 16 2021 

For Tuesday the index is facing volatility with a chance for a dip right near the open following the record close on Monday.

The index is becoming overbought once again. That means dips are very likely for Tuesday but they remain opportunities to setup trades and I don’t expect they will last long.

The outlook is still for a higher close in what will be a choppy session ahead of the Fed news conference on Wednesday.

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