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

Monday saw the S&P open at a new all-time high and then fall back below 4600. A late morning rally moved the index back above 4600. Sellers then pushed the index back to 4595 before a final buying session pushed the index to close at 4613, up 8 points on the day. The morning open saw the S&P reach 4620, another all-time intraday high.

The NASDAQ had a strong day with a gain of 97 points and a new closing high of 15595. Intraday the index came within a point or breaking above 15600.

It was a strong start to November which is normally among the 3 best months of the year.

Let’s review the close on Monday to see what’s in store for Tue Nov 2 2021.

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

The index closed below the Upper Bollinger Band for a seventh day and about 6 points below the intraday high.

This left behind a candlestick signaling a potential change for Tuesday or at the least, some downside action.

Of equal importance is the 21 day moving above and beyond the 50 day moving average. This is a new up signal for the chart and bullish.

The Upper Bollinger Band is still rising which is bullish. The Lower Bollinger Band which was turning up may be getting ready to turn sideways. That would be bullish.

The 50 day is also turning higher as is the 100 and 200 day moving averages. This is bullish.

For Tuesday the chart is bullish except for the closing candlestick which is warning of some selling pressure.

Stock Market Outlook review of Mon Nov 1 2021

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is falling for a fourth day and is 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 Wed Oct 13 2021 . On Monday the up signal slipped for a seventh straight day.

• 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 unchanged..

• 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 and still very 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 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 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:

4600 is resistance

4550 is resistance

4525 is light support

4500 is support

4490 is support

4475 is support

4450 is support

4400 is support

4370 is light support

4350 is light support

4300 is light support

4290 is light support

4270 is light support

4250 is good support

4225 is light support

4200 is good support

4175 is light support

 Stock Market Outlook for Tomorrow – Tue Nov 2 2021 

The technical signals for Tuesday are showing some weakness in stocks and momentum is slowing to the rally. That will mean deeper dips on Tuesday and there is a potential for a negative close although at present, with volumes supporting the bulls, a negative close does seem unlikely.

For the present any dips on Tuesday are opportunities to setup more trades. If there are deeper dips on Tuesday, such as below 4595, I will be buying SPY calls as I think any weakness will be short-lived and we will see the S&P higher by the end of the week.

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