Monday saw the SPX fall back to 4450 in early morning trading. The dip though last just 15 minutes as buyers pounced on the drop to jump into stocks they had missed out on in last week’s rally. By mid-morning the SPX was above 4480 which turned the index sideways. Repeated dips just below 4480 found ready buyers for the remainder of the day. The close saw the index reach 4486 continuing the recovery from the recent sell-off. The NASDAQ rose 124 points to close above 15000 at 15021 for the first close above 15000 since September 24.
Volume on New York was ago low while NASDAQ volume was closer to average.
Let’s review Mon Oct 18 2021 closing technicals and see what to expect for Tuesday.
Stock Market Outlook Chart Comments At The Close on Mon Oct 18 2021
Monday saw the index close above the 50 day moving average and at the Upper Bollinger Band. This is bullish.
The closing candlestick on Monday is bullish for Tuesday but also warns there is a potential for a down day on Tuesday.
The Upper Bollinger Band is rising and the Lower Bollinger Band is falling, both of which is bullish.
The 21 day moving average which fell below the 50 day last week, is beginning to turn sideways as the index climbs higher. While not bullish yet, this is a good sign the index may have seen the bottom of the most recent correction.
The 50 day is trending sideways which is more neutral than bearish.
The 100 and 200 day moving averages are still trending sideways which is neutral to bullish.
For Tuesday there are more bullish signals than bearish although the closing candlestick is a bit of a concern.
Stock Market Outlook review of Mon Oct 18 2021
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 Wed Oct 13 2021 . On Mon Oct 18 the up signal was much stronger again which indicates more upside ahead for the index this week.
- 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 and beginning to enter overbought readings.
- 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 into overbought readings.
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 for a fourth day and into overbought 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 for a fourth day.
- 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 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
4150 is light support
4100 is good support
Stock Market Outlook for Tomorrow – Tue Oct 19 2021
For Tuesday, investors should expect some weakness as indicated by Monday’s closing candlestick. As well the technical readings for a number of indicators are showing overbought which usually means we will see a day or two of some weakness and the potential for a negative day.
Despite these signals, there are still strong enough technical readings to advise that Tuesday should see the index still attempt another positive close.
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