Stock Market Outlook for Wed Nov 4 2020 – Sideways But Still With An Up Bias

Tuesday saw the indexes build on Monday’s rally as Election Day was underway.

All 3 indexes made large gains with the S&P up 1.7% for a 58 point gain to end the day at 3369. Intraday the index reached 3389.

Stock Market Outlook Chart Comments At The Close on Tue Nov 3 2020 

Tuesday’s rally was stronger than Monday’s with the index climbing 58 points. The closing candlestick is bullish for Wednesday and ended the day above the 100 day moving average and below the 21 and 50 day. The candlestick is also indicating the possibility of a dip on Wednesday but at this point, the bias is still to the upside.

The Upper Bollinger Band is still rising and the Lower Bollinger Band is is turning sideways. The 21 day moving average is also starting to turn up while the 50 day is still falling. The 100 and 200 day moving averages are still rising.

The up signal from Oct 21 is still in play, but if the 21 day falls below the 50 day this week, it will negate that signal and start a new down signal.

In general the chart remains bearish but there are more bullish signs after the rally again on Tuesday.

Stock Market Outlook review of Nov 3 2020

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising, negative and not 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 Oct 25. On Tuesday the down signal was weaker and still showing 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 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 an up 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 sideways indicating the advance may slow down on Wednesday.

• 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 is support

3275 is support

3200 is support

3150 is support

3050 is support

3000 is support

 Stock Market Outlook for Tomorrow – Wed Nov 4 2020 

Following a second larger rally on Tuesday the technical indicators are leaving the oversold signals behind. As well, two strong days of rallying should see the index take a bit of a breather on Wednesday, especially with the indecision on the final election outcome.

Dips are more likely for Wednesday but they are opportunities to setup trades as the outlook is still for a move higher, even if on Wednesday the index closes flat to slightly higher.

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