On Tuesday the S&P and NASDAQ ended the day lower. The morning saw both indexes climbing but comments from the Fed Chair Powell and Secretary of the Treasurer Janet Yellen, spooked investors who remain nervous about the potential for rising inflation and interest rates. This resulted in heavy selling in the afternoon.
The S&P ended down 30 points at 3910 in a dramatic plunge which started at 1:20 with the SPX at 3947. The index came within a couple of points of 3900 but managed to close at 3910.
Let’s look at the close on Tuesday and see what the technical indicators can advise investors to expect for Wednesday.
Stock Market Outlook Chart Comments At The Close on Wed Mar 24 2021
The Upper Bollinger Band is not moving higher but instead is trending sideways which is a bit bearish. The Lower Bollinger Band which was falling is starting to turn back up. If it rises to the 50 day it will be bearish.
The 21 day is still trying to rise while the 50 day is dipping lower. Neither is bullish.
The closing candlestick on Tuesday is bearish for Wednesday.
The 100 and 200 day moving averages are all climbing higher. and the index is still above the 21 day moving average which is bullish. A close below it would be bearish at this point in the rally.
Stock Market Outlook review of Tue Mar 23 2021
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 Thursday March 11 2021. On Tuesday the up signal was almost gone. We could get a down signal on Wednesday.
- 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 a down signal in place for a fourth day.
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 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:
4000 is resistance
3900 is support
3850 is support
3800 is support
3750 is good support and the 100 day is at this level
3700 is light support
3680 is light support – The 100 day moving average is at this valuation.
3600 is strong support
3550 is support – The 200 day is at this level. A drop this low would be a 10% correction.
3500 is strong support
3450 is support
Stock Market Outlook for Tomorrow – Wed Mar 24 2021
For Wednesday the technical indicators are primarily pointing lower for the index.
There is still a good chance for a bounce attempt but a break of 3900 seems likely, at least as a retest.
For the close on Wednesday investors should see a negative close.
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