Tuesday saw a huge rally following Monday’s steep losses. Almost all of Monday’s decline was recovered on the S&P as it rose 64 points following Monday’s 68 point loss. The index closed the day at 4323.
The NASDAQ fared far better, jumping 223 points versus Monday’s loss of 152 points.
The technical indicators though, presented a mixed outlook after the rally on Tuesday. Let’s take a look and see what Wednesday may look like.
Stock Market Outlook Chart Comments At The Close on Tue Jul 20 2021
The S&P closed just above the 21 day moving average. This left a bullish candlestick for Wednesday.
The Upper Bollinger Band is turning sharply lower while the Lower Bollinger Band is swinging higher. A Bollinger Bands Squeeze is starting which could swing the market either way. At present the outlook is bearish to neutral for the outcome.
All the major moving averages are still climbing which is bullish. There is a chance on Wednesday the index may try to stage another smaller rally off the 21 day moving average.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and still negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Friday July 16. On Tuesday the down signal was much stronger, despite the large rally. Obviously this indicator is not impressed with Tuesday’s bounce.
- 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.
- 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 still has a strong down signal in place as it too seems unimpressed with Tuesday’s rally.
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:
4400 is resistance
4370 is resistance
4350 is resistance
4300 is light support
4290 is light support
4270 is light support
4250 is light support
4225 is light support
4200 is light support
4175 is light support
4150 is light support
4100 is good support
4070 is light support
4050 is light support
4000 is good support
3900 is support
3850 is support
3800 is support
3750 is good support
3700 is light support
3680 is light support
3600 is strong support
Stock Market Outlook for Tomorrow – Wed Jul 21 2021
The technical indicators are mixed following Tuesday’s massive rally. MACD and the Slow Stochastic are continuing to indicate a move lower is still coming. Momentum is negative but the other three indicators turned sharply higher.
The outlook is mixed for Wednesday but historically this year, big rally days have been followed by a smaller rally day and then a rest. That could be the case for Wednesday. We could see a higher close still but then some weakness on Thursday.