Stronger than estimated July jobs numbers on Friday sent the index higher but enthusiasm was tempered by concerns of inflation and the growing threat the Delta covid-19 variant could cause to the recovery. Investors remained mixed on their outlook but most believe that there are few alternatives at present to stocks. That means like it or not, they are still having to place capital to work in stocks.
The SPX made a new all-time high on Friday of 4440 and closed just below it at 4436. Trading though was in a fairly tight range.
Let’s look at Friday’s close to see what we might expect for the start of the second week of August.
Stock Market Outlook Chart Comments At The Close on Fri Aug 6 2021
On Friday the S&P closed higher by 7 points and left behind a bullish to neutral candlestick for the start of the week.
More important in the chart is the change the Lower Bollinger Band continuing to fall away from the 50 day moving average and the Upper Bollinger Band continuing to rise. This is a bullish signal for the index.
As well all the major moving averages are still climbing which is bullish. For the start of the week, the chart is bullish.
Stock Market Outlook – review of Fri Aug 6 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 a down signal on Mon Aug 2. On Fri Aug 6 2021 the down signal turned slightly positive leaving investors with a neutral signal to start the week.
- 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 still 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 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 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:
4450 is resistance
4400 is resistance
4370 is 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 – Mon Aug 9 2021
For Monday the biggest news is probably the widening spread between the Upper and Lower Bollinger Band. As well the 4370 level which was resistance has changed to light support after last week. That moves the 4250 and 4200 valuations from light support to good support.
Despite the market signaling overbought again, the technical indicators are still overwhelmingly positive. MACD is neutral as of the close which could end the sell signal from the prior Monday if stocks move higher on Monday which seems likely.
For the start of the week, the index is facing an overbought market once again, with a good chance to start the day with weakness and dips which will find ready buyers. With the majority of analysts of the opinion the market will pullback meaningfully in August, there is a good chance that may not happen as history tells us, it is rare when the majority of investors are right in their outlook.
The biggest concern is the Delta variant and whether it will bring some closures back to the economy, something only a handful of analysts believe will happen. The second concern is any hint of a rise in interest rates this fall, should inflation and wage gains continue to “run hot”.
Those two issues would be a catalyst for a move lower in the index.
For the start of the week, neither concern seems likely to stop the advance. Monday should see dips but another higher close.
Stock Market Outlook Archives
Stock Market Outlook for Wed Dec 18 2024 – All About The Fed
Morning Investing Strategy Notes for Tue Dec 17 2024
Stock Market Outlook for Tue Dec 17 2024 – Bullish Ahead Of The FED
Morning Investing Strategy Notes for Mon Dec 16 2024
Stock Market Outlook for Mon Dec 16 2024 – Choppy – Bias Lower
Morning Investing Strategy Notes for Fri Dec 13 2024
Stock Market Outlook for Fri Dec 13 2024 – Confirmed MACD Down Signal
Morning Investing Strategy Notes for Thu Dec 12 2024
Stock Market Outlook for Thu Dec 12 2024 – Bullish Bounce
Morning Investing Strategy Notes for Wed Dec 11 2024
Stock Market Outlook for Wed Dec 11 2024 – Unconfirmed MACD Down Signal
Morning Investing Strategy Notes for Tue Dec 10 2024
Stock Market Outlook for Tue Dec 10 2024 – Bounce Attempt But Lower
Morning Investing Strategy Notes for Mon Dec 9 2024
Stock Market Outlook for Mon Dec 9 2024 – Choppy – Dips Likely But Higher
