Tuesday saw a muted bounce attempt in the early morning which failed. With investors concerned about what the Fed may announcement on Wednesday, most were reluctant to commit to stocks. By the end of the day the S&P was down 3 points for a flat closing at 4354. The NASDAQ squeaked out a small gain of 32 points ending the day at 14746. The closing technical indicators on Tuesday were largely unchanged from Monday except as you can read below, some subtle changes would indicate a second bounce attempt is brewing.
Stock Market Outlook Chart Comments At The Close on Tue Sep 21 2021
On Tuesday, the index was unable to break above the Lower Bollinger Band. It also failed to recover Monday’s opening but it did not break down to the lows we saw on Monday. Instead the index stayed above the 100 day moving average but below the Lower Bollinger Band. This is still bearish but also signals a potential bounce is coming.
The Upper Bollinger Band is rising which is bullish. The closing candlestick on Tuesday is bearish but also indicates there is a potential for a bounce above the Lower Bollinger Band.
The Bollinger Bands Squeeze that was likely this week is gone which is bullish.
The 21 and 50 day moving averages are continuing to dip lower which is bearish.
Only the 100 and 200 day moving averages are climbing. For Wednesday there are now more bearish signals than bullish ones on the SPX chart but once again it does point to a potential bounce on Wednesday.
Stock Market Outlook review of Tue Sep 21 2021
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative. It is showing extremely oversold.
- 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 rose strongly again and is now very oversold.
- 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 dipping lower but not signaling oversold readings.
- 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 oversold.
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 and oversold.
- 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 still deeper and is not at readings that normally spark a move back up.
- 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 light support
4450 is light support
4400 is good support
4370 is good 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
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
Stock Market Outlook for Tomorrow – Wed Sep 22 2021
For Wednesday the index is once again set for a second bounce attempt. A lot will depend on the Fed and how any news of a tapering of liquidity is handled. An aggressive stance by the Fed Chair, which I believe is highly unlikely, will result in the index falling below the 100 day and quickly reaching the 200 day. A passive stance by the Fed Chair should not spook the markets.
For investors, another rally is expected. The technical readings are extremely oversold in most cases and half of the indicators are at readings that usually are followed by a bounce.
On Tuesday the morning bounce reached just above 4390 before running into a wall of sellers. On Wednesday another attempt to bounce that high is quite probable.
Stock Market Outlook Archives
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