On Tuesday investors finally got the bounce they have waited for. The S&P closed up at 3315, regaining 3300 but is still down 4 points on the week so far. The NASDAQ closed at 10,963 and ahead on the week by 170 points.
Stock Market Outlook Chart Comments At The Close on Tue Sep 22 2020
On Tuesday the index fbounced off the Lower Bollinger Band but closed below the 50 and 21 day moving averages.
The closing candlestick is bullish although often this same candlestick is followed by a weak day.
The index has now been trading below the 21 day moving average for 11 straight days without being able to climb back above it. This remains a strong bearish signal.
The Lower Bollinger Band is still falling dramatically lower and could cross below the 100 day shortly which would be bearish. The Upper Bollinger Band is rising
The 21 day moving average is turning sharply lower.
The 50, 100 and 200 day moving averages are still climbing. There are still 6 up signals and two down signal caused when the Lower Bollinger Band moved above the 100 day moving average back on July 27 and on Aug 31 above the 50 day. The SPX chart is more bearish than bullish.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Sep 4. On Tuesday the down signal was a bit weaker but still has strong down signals.
- 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 has a neutral 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 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 also 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
3500 is resistance
3450 is resistance
3400 is resistance
3375 is resistance
3300 was support
3275 is support
3200 is support
3150 is support
3050 is support
3000 is support
2975 is light support
2950 is light support
2900 is light support
Stock Market Outlook for Tomorrow – Wed Sep 23 2020
For Wednesday the technical indicators are a bit stronger following Tuesday’s rally. However signals are still on the weak side. We could see a bounce on Wednesday but further selling could also easily erupt.
A flat close could be in the works for Sep 23 but it won’t take much to get sellers back taking profits if a new catalyst to the downside appears. For Wednesday it is a day to be cautious and place only small trades.