With a chance of a rally on Monday probably around 90% after Friday’s overreaction plunge, indexes did not disappoint. The S&P rose 60 points recovering 56% of Friday’s 106 point plunge. The NASDAQ did better, rallying 291 points recovering 82% of Friday’s 353 point drop. While the bounce was great to see, there are problems facing Monday’s rally including narrow breadth with too many investors buying the same stocks and much of the volume on Monday on both indexes was still falling lower. The NASDAQ on Monday for example still had 346 new 52 week lows while Friday had closed with 347 new lows.
Let’s see what the closing technical indicators from Monday’s rally day can tell us about Tuesday’s market.
Stock Market Outlook Chart Comments At The Close on Mon Nov 29 2021
In the chart you can see the candlestick Monday jumped to the 21 day moving average but was rejected which resulted in a neutral candlestick signaling a chance for a second bounce on Tuesday to try to get back above the 21 day moving average.
The Lower Bollinger Band is still rising above the 50 day which is bearish and the Upper Bollinger Band turned still lower as the Bollinger Bands Squeeze continues and remains bearish at present.
The 21, 50, 100 and 200 day moving averages are all climbing. This is bullish.
For Tuesday the chart is mixed but still holding a bearish outlook for Tuesday.
Stock Market Outlook review of Mon Nov 29 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 Wed Nov 17 2021 . On Monday the down signal still increased in strength despite the rally.
- 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 but actually moving more sideways than up or down.
- 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 strong down signal for Tuesday.
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 away from oversold readings.
- 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 slightly or slowly.
- 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:
4700 is resistance
4655 is resistance
4600 is good support
4550 is light support
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
Stock Market Outlook for Tomorrow – Tue Nov 30 2021
The rally on Monday was great to see but most of the technical indicators were not impressed. Instead many indicators were gaining more strength to the downside.
Although Monday was definitely a bounce, there was strength to the rally but only in specific stocks. Many stocks continued to languish and not participate in the rally. This is bearish and we need to see an increase in the number of stocks participating in the rally.
On Tuesday we will see deeper dips, some that could surprise. There is almost an equal chance for a close above 4600 or a close just below 4655.
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