Monday started off well, with the SPX rising to 4415 by 10:30. A small dip was quickly bought into and the index rose again to 4414 by 11:40. However over the lunch hour investors lost interest in buying and volumes dried up. With buyers pulling back stocks fell dramatically and by 1:30 the index was down to just below 4380 and moved to support at 4375. When that level broke the S&P slid without a stop, to 4361 where it closed for the day. This was a disappointing day especially after the morning rally. From the high of the day to the close of the day, the SPX traveled down 54 points. It closed at 4361 for a loss of 0.69% or 30 points to start the week.
Let’s review Monday’s closing numbers to see what is in store for Tuesday.
Stock Market Outlook Chart Comments At The Close on Mon Oct 11 2021
The SPX closed back below the 50 and 21 day moving averages. This left behind a bearish candlestick for Tuesday.
Meanwhile the Upper Bollinger Band is starting to turn sideways and the Lower Bollinger Band is drifting lower. This could be seen as potentially a bullish signal.
The 21 day moving average which fell below the 50 day last week, continued to move lower on Monday and the SPX closed just above the 100 day. This is a bearish signal.
The 100 and 200 day moving averages are continuing to turn lower. This also is bearish.
For Tuesday, bearish signals are more dominant in the index chart which is signaling another choppy day for Oct 12.
Stock Market Outlook review of Mon Oct 11 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative. Momentum has not been positive since Sep 8. This is more than a month of negative momentum.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thu Sep 9. On Monday the down signal was almost gone.
- 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 and back negative.
- 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 is rising higher.
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 slipping lower.
- 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.
- 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:
4550 is resistance
4525 is resistance
4500 is resistance
4490 is resistance
4475 is resistance
4450 is resistance
4400 is resistance
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
4150 is light support
4100 is good support
Stock Market Outlook for Tomorrow – Tue Oct 12 2021
Monday was disappointing, but volumes were extremely low. Often this indicates we will see a bit more selling on the following day and then a move back up.
For Tuesday then, most of the signals have not changed much from Friday’s close which means investors should expect more weakness and a move lower, followed by another bounce attempt.
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