Stock Market Outlook for Tue Mar 2 2021 – Dips Likely But Higher Close

Over the weekend the 10 year Treasury dipped and by Monday the stage was set for a huge bounce in all 3 oversold indexes.

The S&P soared 90 points to close at 3901. The NASDAQ rose 396 points to close at 13,588 and the Dow Jones rose 603 points closing at 31,535.

Stock Market Outlook Chart Comments At The Close on Mon Mar 1 2021 

The S&P climbed higher off the 50 day moving average and broke above the 21 day moving average. It tried several times to move above 3900 but each time the index found ready sellers and would fall back. Into the close the index closed at 3900.

This left behind a bullish candlestick for Tuesday.

The Upper Bollinger Band is turning lower while the Lower Bollinger Band is rising. We could see a Bollinger Bands Squeeze by the end of the week unless the index continues to climb higher.

The 21 day moving average is trying to turn back up while the remaining 50, 100 and 200 day moving averages are all climbing higher.

Overall the market is showing more strength after Monday’s close but there is still room for a dip on Tuesday.

Stock Market Outlook review of Mon Mar 1 2021

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising and negative.

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

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Mon Feb 23 2021. On Monday the down signal weakened slightly.

• 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 a down signal in place

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 rising indicating changes will be seen in prices again 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:

4000 is resistance

3900 is resistance

3850 is support.

3800 is support.

3750 is support

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 2 2021 

The rally on Monday was strong but on less volume than seen most days in February. That advises we should expect some dips on Tuesday as the market “digests” the rally.

The technical indicators are also pointing to a higher close for Tuesday which means dips are opportunities to setup trades. On Tuesday then watch for choppy trading, dips but a higher close.

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