Tuesday was another day with a bounce at the open and then a drop within the first 15 minutes down to the 4350 level. That resulted in a bounce which by noon had recovered the morning high around 4373. As the lunch hour came to a close the index dipped back again almost reaching the 4350 level before trying for another bounce after 2:00 PM. When that bounce failed the index fell lower with buyers stepping aside. With 10 minutes left in the day the SPX was down to 4342 before a flurry of buying managed to push the SPX back to the morning low of 4350 for a loss of 10 points on the day. The NASDAQ lost just 20 points to close at 14466.
Let’s review the closing indicators from Tuesday’s market to see what to expect for Wednesday.
Stock Market Outlook Chart Comments At The Close on Tue Oct 12 2021
The SPX closed below the 50 and 21 day moving averages and just above the 100 day. This left behind a bearish candlestick for Wednesday.
Meanwhile the Upper Bollinger Band is back falling along with the Lower Bollinger Band. This is bearish.
The 21 day moving average which fell below the 50 day last week, is continuing to fall and is now below the 4400 level. The 50 day is also falling. This is bearish.
The 100 and 200 day moving averages are continuing to turn lower as well. This also is bearish.
For Wednesday bearish signals are dominant. About the only bullish signal could be the index almost touching the 100 day moving average which often results in a bounce attempt.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and near positive. Momentum has not been positive since Sep 8. This is more than a month of negative momentum.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thu Sep 9. On Tuesday the down signal was almost gone.
- 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 and negative.
- 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 falling.
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 slipping lower.
- 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 falling.
- 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:
4550 is resistance
4525 is resistance
4500 is resistance
4490 is resistance
4475 is resistance
4450 is resistance
4400 is resistance
4370 is light support
4350 is light support
4300 is light support
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
4175 is light support
4150 is light support
4100 is good support
Stock Market Outlook for Tomorrow – Wed Oct 13 2021
Wednesday looks weak again with most of the technical indicators pointing to a further move lower. The key for Wednesday though could be all the technical indicators that are overwhelmingly bearish. Often when there are so many bearish signals, the index is reaching a point where a bounce could occur. As well, a dip to the 100 day on Wednesday seems likely, but again, a dip to the 100 day often sparks a rally.
Overall though, even with a bounce, the index looks weak here. I had not expected the index to slide below the prior lows of 4300 from Oct 4. This is now just 50 points away. A bounce on Wednesday is important for the bulls and with bank earnings coming up staring Wednesday before the open, we may see a bounce. If however bank earnings fails to meet estimates, the index could be setup for a move to break to a new sell-off low. I think bank earnings will be good and the index will bounce. The technical indicators however, disagree and point to more downside. For Wednesday then, the outlook is for a potential bounce but a lower close. Bank earnings could have a major impact on Wednesday’s market direction.