Tue Jan 12 2021 saw weakness continue with the S&P dipping deeper but managing to recover to close just above 3800.
While the end saw just a single point gain, what was more important was the index still holding the 3800 level.
Stock Market Outlook Chart Comments At The Close on Tue Jan 12 2021
On Tuesday the index closed below the Upper Bollinger Band and left behind a bearish candlestick for the third straight trading day.
Both the upper and lower bands continue to separate and the Lower Bollinger Band is further below the 50 day moving average. The Upper Bollinger Band is continuing to rise.
The major moving averages are still rising and the up signal from Oct 21 is still in play. Despite the three straight bearish candlesticks, the chart remains bullish.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling 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 Dec 7. On Tuesday the up signal was almost unchanged.
- 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 moving sideways.
- 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 still 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 moving sideways.
- 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 higher which indicates there will be further changes in prices on Wednesday.
- 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:
3800 is resistance
3750 is resistance
3700 is light support
3600 is strong support
3550 is support
3500 is strong support
3450 is support
3400 is support
3375 is support
3300 is strong support
3275 is support
3200 is support
3150 is support
3050 is support
3000 is strong support
Stock Market Outlook for Tomorrow – Wed Jan 13 2021
For Wednesday the market continues to look like a sideways pattern will dominate but the close still points to being higher.
The 3800 level will be tested again on Wednesday and the index will fall below it intraday.
The overall outlook for the index is sideways but still with an up bias.