Stock Market Outlook for Wed Dec 29 2021 – Overbought But Bias Up

Tue Dec 28 2021 saw a second day of low volume. The index set a new intraday high reaching 4807 before slipping back lower. It was a day of with a tight trading range from 4780 to 4800. The index was moving to a new closing high near the end of the day but sellers in the final 15 minutes send the S&P down to 4786. Minutes earlier it was pushing higher at 4795.

The NASDAQ lost half a percent to close down 89 points at 15781. Intraday the NASDAQ reached 15901.

Let’s review the closing technical indicators from Tuesday to see the outlook for Wednesday.

Stock Market Outlook Chart Comments At The Close on Tue Dec 28 2021 

The closing candlestick on Tuesday is still bullish for Wednesday. The index closed at the Upper Bollinger Band and is pressuring it to move  higher.

Meanwhile the 21 day moving average bounced off the 50 day today, sending a new up signal to the markets.

The Lower Bollinger Band is still below the 100 day moving average which is bullish. The Upper Bollinger Band is rising, which is also bullish.

Meanwhile the 50, 100 and 200 day moving averages are still climbing, all of which is bullish.

For Wed Dec 29 2021 the chart is bullish but dips should be expected in the morning.

Stock Market Outlook review of Tue Dec 28 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 Thursday Dec 23. Today the up signal was stronger.

• 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 overbought.

• 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 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 dipping slightly 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 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:

4800 is resistance

4725 is resistance

4700 is resistance

4670 is support

4655 is light support.

4600 is good support

4550 is light support

4525 is light support

4500 is support

 Stock Market Outlook for Tomorrow – Wed Dec 29 2021 

For Wed Dec 29 2021 the markets remain overbought and continue to have a good chance for a dip, intraday. Any dips are an opportunity as the index is still bullish.

The morning should be weaker than the afternoon on Wednesday.

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