Tuesday saw the inflation numbers come in much stronger than expected by almost all analysts and investors immediately commenced selling. As the day wore on the selling intensified when Goldman Sachs commented they believed the Fed would tighten three-quarters of a percent in September but also in October. Investors headed to the exit. 95% of all trades on the S&P were to the downside with volume rising to 4.3 billion. On the NASDAQ 77% of volume was being traded lower. Volume jumped by one billion shares on Tuesday. Many investors and analysts are now convinced that the Fed will push the economy into a recession and inflation won’t be tamed for months to come.
The markets basically gave back all the rally of the past 4 days. The S&P closed down 177 points to end the day at 3932 almost at the low of the day. Selling was relentless with very little attempt to bounce back intraday. The largest most recent loss was on Friday Aug 26 when the SPX lost 141 points and ended the day at 4057. Over the following 6 trading days the SPX lost another 149 points to end at 3908.
The NASDAQ closed down 632 points ending Tuesday at 11,633. This is just 3 points above where the NASDAQ ended the day on Friday Sep 2 when the Fed Chair collapsed stocks with his comments from Jackson Hole.
The last big drop on the NASDAQ was also Friday Aug 26 when the index lost 497 points. Following that plunge the index fell 5 straight days losing an additional 596 points before the present rally started on Sep 7.
Historically the chance of a bounce back is slim. Normally a plunge as deep as this is followed by a small bounce attempt followed by heavier selling. The S&P will probably head to 3800 or the lows of mid-July before investors tire of selling.
Let’s review the closing technical indicators from Tuesday’s massive sell-off to see what we should expect for Wed Sep 14 2022.
Stock Market Outlook Chart Comments At The Close on Tue Sep 13 2022
The first thing to mention is there is a new down signal after the plunge on Tuesday with the 21 day moving average falling below the 100 day. This is a third down signal, as the market was unable to overcome the sell signals from April 24 and April 26 earlier this year.
The closing candlestick is bearish but it indicates there is a possibility of an oversold bounce but it won’t hold at all.
The candlestick closed back below all moving averages which is bearish. It ended the day well below the 50 day moving average.
The Bollinger Bands are indicating further downside lies ahead. The Upper Bollinger Band and Lower Bollinger Band are turning lower signaling stocks have further to fall.
The 21 day moving average is falling further away from the 200 day and could fall below the 50 day as the rest of this week plays out.
All the moving averages are now falling which is bearish.
The first up signal since April was released Tuesday Aug 2 when the 21 day moving average crossed above the 50 day moving average.
The second up signal from Wed Aug 16 was wiped out today when the 21 day moved back below the 100 day after failing to reach the 200 day.
There are now 3 down signals in place and one up signal that will be wiped out shortly.
The chart is 95% bearish for Wednesday.
Stock Market Outlook review of Tue Sep 13 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and back negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Monday Aug 22. On Tuesday the down signal gained strength. The histogram also gained strength signaling more downside is ahead for stocks.
- 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 sharply and ready to turn negative.
- 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 not 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 falling sharply and near oversold readings.
- 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 sharply, indicating some big moves lie ahead for the index.
- 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 stronger resistance
4220 is light resistance
4200 is strong resistance
4150 is light resistance
4100 is light resistance
4050 is light resistance
4025 is light resistance
4000 is light resistance
3975 is light support and is a decline of 17.5%
3950 is light support
3925 is light support
3900 is strong support
3875 is light support
3850 is good support
3825 is light support
3810 is good support
3800 is light support
Stock Market Outlook for Tomorrow – Wed Sep 14 2022
For Wednesday the markets could try to bounce but the technical indicators are advising there is heavier downside still ahead despite the massive sell-off. As explained in the opening comments tonight, historically a sell-off such as we saw on Tuesday is followed by more selling and a move lower, sometimes interrupted by bounce attempts, all of which fail.
This year for example both the S&P and NASDAQ saw strong selling volume a number of times and each time, rally attempted failed until the index moved lower. For example in May the index lost 153 points on Thursday May 5, then 132 points on May 9 and 165 points on May 18. The index had started at 4300 and ended up at 3923 for a fall of 377 points. On Tuesday the SPX lost 177 points. If it loses even 150 points, it will be below 3800.
For now the outlook is for markets to try to slow the selling but probably with limited success until the index is lower. Many analysts after Tuesday’s collapse felt the lows from June may be tested again sometime in October.
But for now, Wednesday will see a bounce attempt at some point, but probably after falling lower in the early morning trading. I believe the close will be below 3900. At present, I will be buying SPY put contracts on each rally attempt and selling them as the market slips lower.
Potential Market Moving Events
This week we get a number of inflation reports. Watch Monday and especially Tuesday for inflation reports that could swing markets higher or lower.
Tuesday:
8:30 Consumer Price Index rose 0.1% for August, ahead of the expected decline of 0.1%.
8:30 Core CPI is expected to come in at 0.3% but came in at 0.6%
8:30 CPI Year-On-Year is estimated to be no higher than 8%. For July it was 8.5%. It came in at 8.3%, not as high as July but above the 8% expected. This caused the start of the sell-off.
8:30 CPI Core year-on-year is estimated to be 6%, up slightly from July’s 5.9%. Instead it came in at 6.3%.
Wednesday:
8:30 On Wednesday the Producer Price Index (final demand) is expected to be negative 0.1%.
Stock Market Outlook Archives
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Morning Investing Strategy Notes for Tue May 5 2026
Stock Market Outlook For Tue May 5 2026 – Overbought and Lower
Morning Investing Strategy Notes for Mon May 4 2026
Stock Market Outlook For Mon May 4 2026 – Dips Likely With Possible Lower Close
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Stock Market Outlook For Fri May 1 2026 – Overbought But Higher
Morning Investing Strategy Notes for Thu Apr 30 2026
Stock Market Outlook For Thu Apr 30 2026 – Dips Likely Possible Lower Close
Morning Investing Strategy Notes for Wed Apr 29 2026
Stock Market Outlook For Wed Apr 29 2026 – Choppy But Higher Ahead Of More Earnings
Morning Investing Strategy Notes for Tue Apr 28 2026
