The S&P shot higher on the news of a vaccine from Pfizer that has proven 90% effective. The index made a new all-time high on the news, reaching 3645.99 before pulling back. The jump higher was given back as the day progressed and the index closed up 1.17% for a gain of 41 points to 3550. The NASDAQ on the other hand fell 1.5% to lose 181 points and close at 11713 as investors rotated out of many tech names on the news of the vaccine.
Let’s review the closing technical indicators from Monday to see what we should expect following what was, at one point in the morning, a massive rally for New York.
Stock Market Outlook Chart Comments At The Close on Mon Nov 9 2020
Monday saw the index punch above the Upper Bollinger Band before closing below it. This left behind what is often referred to as a shooting star candlestick. The index open the day higher, reflected by the long shadow to the top of the candlestick but closed well off the highs. Normally this a a rather bearish outlook for the following day. Basically we should expect to see some dips on Tuesday and a possible lower close but the candlestick still points to a bullish outlook for much of the week.
The Upper Bollinger Band is still rising and the Lower Bollinger Band is still sideways. The 21 day moving average and 50 day are also turning higher as are the 100 and 200 day moving averages which is bullish.
The up signal from Oct 21 is still in play, and the chart remains bullish.
Stock Market Outlook review of Mon Nov 9 2020
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 Nov 5. On Monday the up signal was very 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 falling indicating we could see a down day 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 in place but it is overbought and the up signal looks set to possibly move back lower.
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 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 dipping lower indicating we could see weaker prices 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:
3600 is resistance
3550 is resistance
3500 is support
3450 is support
3400 is support
3375 is support
3300 is support
3275 is support
3200 is support
3150 is support
3050 is support
3000 is support
Stock Market Outlook for Tomorrow – Mon Nov 9 2020
3550 and 3600 are still resistance for the rally until we see a number of higher closes above each of them.
For Tuesday, Monday’s big rally will result in some dips and there is a good chance for a lower close. Overall though, the outlook is still bullish for the weekly outlook, even if on Tuesday we see some dips.
The outlook then is overbought with dips likely and a lower close for Tuesday but still bullish overall.
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