Stock Market Outlook for Wed Dec 30 2020 – Some Weakness But Bias Is Still Up

Tuesday saw all three indexes drift in a tight trading range and close slightly lower as investors waited for further news on expanding the Covid-19 stimulus package.

Stock Market Outlook Chart Comments At The Close on Tue Dec 29 2020 

Tuesday saw the index once more at the Upper Bollinger Band.  This left behind a bearish candlestick for Wednesday.

The Bollinger Bands Squeeze is still in play but both the upper and lower bands are indicating we could see the squeeze start to end this week. The outlook is still promising for more upside action.

All the major moving averages are still rising which continues to suggest that new highs lie ahead for the S&P. The up signal from Oct 21 is still very much in play for the final week of the year.

Stock Market Outlook review of Tue Dec 29 2020

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 a a down signal on Dec 10. The down signal was weaker on Tuesday.

• 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.

• 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.

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.

• 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 trending sideways.

• 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:

3700 is resistance

3600 is light support

3550 is support

3500 is support

3450 is support

3400 is support

3375 is support

3300 is support

3275 is support

3200 is support

3150 is support

3050 is support

3000 is support

 Stock Market Outlook for Tomorrow – Wed Dec 30 2020 

For Wednesday the technical indicators are mixed with 3 pointing higher, 2 pointing lower and 1 pointing sideways. That’s a good combination to have for the present market.

Investors should expect another choppy day of trading as the market awaits confirmation on the upgrade to the Covid-19 stimulus package to provide more funds for individuals than the original $600.

With the technical indicators more mixed, there is a better chance for a higher close on Wednesday despite some weakness in several sectors, seen on Tuesday.

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