Stock Market Outlook for Wed May 26 2021 – Unchanged At Higher Still

Tuesday saw sellers chasing buyers for most of the day resulting in the index slipping all day until it closed down just shy of 9 points at 4188. The slight loss did nothing to change the bullish outlook.

Stock Market Outlook Chart Comments At The Close on Tue May 25 2021 

The Bollinger Bands are continuing to widen which is a bullish sign. The Lower Bollinger Band is below the 50 day moving average which is a bullish signal.

The S&P stayed above the 21 day moving average and ended above it. This left behind a bullish candlestick for Wednesday.

The 21 day moving average stopped declining on Monday and the 50, 100 and 200 day moving averages are still climbing.

The chart is still mixed but the close above the 21 day moving average on Monday and again on Tuesday is a bullish sign.

The biggest problem still facing the index is lower trading volume although on Tuesday volumes were a bit better than was seen on Monday.

Stock Market Outlook review of Tue May 25 2021

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising and positive.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Friday April 30 2021. On Tuesday the down signal is almost gone by the close.

• 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 for Wednesday.

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 but just slightly which indicates investors should expect a big change in prices for 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:

4250 is resistance

4225 is resistance

4200 is resistance

4150 is light support

4100 is light support

4070 is very light support

4050 is light support and where the 50 day is currently residing. This would represent a 4.4% decline.

4000 is good support

3900 is support and just below the 100 day moving average.

3850 is support

3800 is support

3750 is good support

3700 is light support and just below the 200 day moving average.

3680 is light support

3600 is strong support

 Stock Market Outlook for Tomorrow – Wed May 26 2021 

For Wednesday the S&P is still sitting with a bullish stance. The technical indicators are still fairly bullish with only a couple of the indicators pointing to some weakness. In general the technical indicators are still supportive of a move higher as overall the outlook has not changed and the low from Tuesday of 4182 may not be revisited on Wednesday. Instead, a close above 4200 is expected.

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