With no further news on the vaccines on Tuesday, the rally stalled as investors took some profits.
All three indexes saw mild losses with the S&P closing down 17 points to 3609. This left the S&P still above 3600 and less than 40 points from the all-time high.
Stock Market Outlook Chart Comments At The Close on Tue Nov 17 2020
Tuesday saw the index close again above the 3600 level. The closing candlestick is bearish and often points to a potential for a reversal day for Wednesday. Considering the market remains overbought, another potential down day would not be a surprise. It also would not break the rally.
The Upper Bollinger Band continues to climb above SPX 3600 closing around 3673 on Tuesday. The Lower Bollinger Band is falling further indicating there is more upside ahead. It is nearing the 200 day moving average. If the 200 day moves above the Lower Bollinger Band it will be another up signal.
The 21 day, 50 day, 100 day and 200 day moving averages are all rising, a bullish sign. The up signal from Oct 21 is still in play, and the chart remains bullish.
Stock Market Outlook review of Tue Nov 17 2020
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 Nov 5. On Tuesday the up signal was still strong but weakened slightly from Monday’s reading.
- 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 and is 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 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 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:
3600 is resistance
3550 is resistance
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 Nov 18 2020
The closing candlestick on Tuesday often is a warning of another down day. At the same time there is still a chance that Tuesday was just profit-taking before another move higher.
To try to understand the candlestick further, we can look at the technical indicators.
Those indicators are mixed. Three are falling and three are rising. That gives us a mixed outlook which is exactly what the closing candlestick is also advising.
For Wednesday Nov 18 the outlook is for a choppy day with some dips, probably in the morning but another chance for a push to try to close above 3610. If wrong, and the index dips lower at the close, it will not yet signal an end to the present rally. At present I would predict a 55% chance for a lower close and a 45% chance for a higher close. My personal view is a higher close could be expected for Wednesday.
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