Monday saw the S&P open the day lower and then spend the rest of the day falling. By the close the S&P was down 1.3% for a loss of 56 points to 4300. This was off the low of the day of 4278. It was also a close at support.
The NASDAQ fell 311 points to close at 14255. Part of the decline was caused by Facebook Stock (FB) falling 4.8% to end the day at $326.23 following a whistle-blower’s allegations on Sunday night’s 60 minutes. On top of the allegations Facebook went dark for 7 hours throughout much of the globe on Monday. Other big cap tech stocks also pulled back on Monday including NVIDIA Stock (NVDA) down 4.8%, PayPal Stock (PYPL) down 3.6%, Adobe Systems Stock (ADBE) down 3.2%, Amazon.com Stock (AMZN) down 2,8%, Apple Stock (AAPL) down 2.4%, Alphabet Stock (GOOGL) down 2.1% and Microsoft Stock (MSFT) down 2% which helped to push the NASDAQ lower.
Let’s review the closing technical signals from Monday, to see what’s in-store to Tuesday.
Stock Market Outlook Chart Comments At The Close on Tue Oct 5 2021
The most significant indicator on Monday was the 21 day falling clearly below the 50 day moving average. This is another down signal.
The index dropped below the 100 day MasterCard Stock (MA) and managed to close at the Lower Bollinger Band. This is bearish.
The close places the index within 170 points of the 200 day moving average.
The closing candlestick is bearish for Tuesday.
The Upper Bollinger Band is falling which is bearish.
The 100 and 200 day moving averages are both starting to fall. This is bearish.
For Tuesday there are no bullish signals.
Stock Market Outlook review of Mon Oct 4 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and staying negative. It is moving away from being oversold.
- 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 gained strength and is still oversold.
- 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 as it trends sideways and is near oversold.
- 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 down signal in place and is oversold.
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 falling back to 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 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:
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 5 2021
For Tuesday the market is now contending with another down signal as the 21 day has fallen below the 50 day. This is a strong down signal and normally we should expect further downside action.
The market though is oversold as you can see from the many technical indicators that signaling oversold.
Investors should prepare for more downside on Tuesday but also be aware that as the index becomes more oversold, the chance of a sharp bounce is still with us. The bulls have not fled the market. Daily volumes are not high enough to suggest any kind of panic selling. Instead we are seeing a slow erosion of stocks as investors continue to take profits in many names that reached some rather amazing prices, especially considering this is still a pandemic.
On Tuesday expect the index to try a rebound rally, probably early to mid-morning. However expect it to fail and the index will close negative. Wednesday though, could see a better bounce attempt.
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