Monday’s trading was interrupted by Fed Chair Powell’s speech which spooked investors as they felt it was too hawkish. His comments on the possibility of half point rate hikes seemed to catch investors by surprise. They sent all three stock indexes lower. However by the end of the day, investors had pushed back and the S&P closed down just 2 points at 4461. The NASDAQ was down 55 points to 13838. What was interesting though were some of the changes to the SPX chart and technical indicators by the close of trading on Monday.
Let’s review Monday’s closing technical signals to see what we should expect for Tuesday.
Stock Market Outlook Chart Comments At The Close on Mon Mar 21 2022
Despite the selling, the S&P chart continues to show improvement on Monday. Of significance is the Upper Bollinger Band which is turning up. The Lower Bollinger Band is turning lower. This points to no Bollinger Bands Squeeze for this week and a good chance the index will try to move higher again. The Upper Bollinger Band moving higher and away from falling below the 100 and 50 day moving averages is a bullish sign.
The closing candlestick on Monday stayed above the 200 day moving average but it bearish. Often this type of candlestick will be followed by a down day or even two down days.
The 21 day moving average is still trending sideways and starting to turn back up. This is bullish.
The SPX still has 4 down signals in place. The 200, 50 and 100 day moving averages are still falling lower.
The chart is more bullish than it has been in days and at the highest valuation since Feb 11. The chart indicates the market is overbought but there is still room to the upside.
Stock Market Outlook review of Mon Mar 21 2022
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 an up signal Wed Mar 16 2022. On Monday the MACD signal remained strong with a reading of 27.68. The MACD histogram also has a very strong reading which is quite noticeable in the chart.
- 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 for a fifth day and not into overbought signals.
- 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 still has a strong up signal in place and signaling 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 for a fifth day and signaling overbought.
- 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 and indicates prices will rise again on Tuesday.
- 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:
4500 is resistance
4490 is light resistance
4475 is light resistance
4450 is light support
4400 is support
4370 is light support
4350 is light support.
4300 is good support
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
4150 is good support
4000 is good support
Stock Market Outlook for Tomorrow – Tue Mar 22 2022
For Tuesday the technical indicators are signaling that the rally is slowing and may even stop. Markets are overbought. That means dips are likely on Tuesday, but any dips are opportunities to setup more trades.
The close on Tuesday should see the indexes higher. Markets though are overbought which means we will see some selling and indeed dips may prove much deeper than expected. Despite this, the outlook remains bullish. This means lower dips are a chance to setup further trades on Tuesday.
Stock Market Outlook Archives
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Stock Market Outlook for Mon Nov 18 2024 – Choppy – Possible Bounce Attempt
Morning Investing Strategy Notes for Fri Nov 15 2024
Stock Market Outlook for Fri Nov 15 2024 – Choppy With Bias Lower
Stock Market Outlook for Thu Nov 14 2024 – Choppy – Dips Possible But Higher Close
Morning Investing Strategy Notes for Thu Nov 14 2024
Morning Investing Strategy Notes for Wed Nov 13 2024
Stock Market Outlook for Wed Nov 13 2024 – Choppy Trading Bias Lower
Morning Investing Strategy Notes for Tue Nov 12 2024
Stock Market Outlook for Tue Nov 12 2024 – Overbought – Dips Likely But Bullish
Morning Investing Strategy Notes for Mon Nov 11 2024
Stock Market Outlook for Mon Nov 11 2024 – Overbought – Higher Still
Morning Investing Strategy Notes for Fri Nov 8 2024
Stock Market Outlook for Fri Nov 8 2024 – Overbought – Dips Likely But Higher Close
