Stock Market Outlook for Wed Sep 8 2021 – Potential Bounce But Lower Close

Tuesday’s market saw better volume as investors returned from the long weekend. The NASDAQ managed another new closing high by the Dow Jones and the S&P closed lower. The S&P lost just 15 points and closed at an important technical point, 4520. That could set the index up for a bounce attempt on Wednesday but a lower close seems likely while investors consolidate positions, take some profits and move capital into other sectors and stocks to prepare for the fall.

Stock Market Outlook Chart Comments At The Close on Tue Sep 7 2021 

The Lower Bollinger Band is no longer falling but instead is trending sideways. It could turn back up above the 50 day moving average and that would be bearish. The Upper Bollinger Band is still rising, which is bullish.

The closing candlestick on Tuesday was bearish for Wednesday. The candlestick is also signaling that investors should expect a potential bounce especially at the start of the day.

All the major moving averages are still climbing which is also bullish. For Wednesday the SPX chart remains bullish despite the Lower Bollinger Band and Tuesday’s closing candlestick.

Stock Market Outlook review of Tue Sep 7 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 Fri Aug 27. The up signal was weaker again on Tuesday.

• 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 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 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 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

3700 is light support

3680 is light support

3600 is strong support

 Stock Market Outlook for Tomorrow – Wed Sep 8 2021 

For Wednesday the technical indicators have turned lower and with all of them pointing lower, often we will see a bounce. The closing candlestick on Tuesday points to a good chance for a bounce.

Overall the outlook remains bullish but it would not be prudent to think that the SPX might close a bit lower even with a bounce attempt in the morning. This is just weakness at this point in the ongoing rally. That means watching for trading opportunities in that weakness could prove profitable. I am using the dip to setup more trades as I expect the index to snap back shortly.

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