Tuesday saw the S&P continue to hold the 3800 level. The index closed up 30 points to end the day at 3798.
Stock Market Outlook Chart Comments At The Close on Tue Jan 19 2021
On Tuesday the index closed below the Upper Bollinger Band but close to the high of the day. The index continued to show strength around the 3800 level. The closing candlestick is bullish for Wednesday.
While the Upper Bollinger Band is continuing to rise, the Lower Bollinger Band is starting to turn back up and could move back above the 50 day moving average. This would be bearish should it occur.
The major moving averages are still rising and the up signal from Oct 21 is still in play (no longer shown in the chart). The chart is still bullish with few bearish signals.
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 Dec 7. On Friday it issued an unconfirmed down signal and on Tuesday the down signal was still active but not confirmed.
- 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 back positive.
- 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 rising.
- 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:
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 20 2021
For Wed Jan 20 2021, Inauguration Day, historically the market is bullish and most of the signals after the close on Tuesday, point to history repeating itself again today.
There could be some weakness shown during the day, particularly early in the day but as the Inauguration Ceremony gets underway and after the swearing in ceremony, we should see the index climb higher for Wednesday.