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Stock Market Outlook for Fri Apr 19 2024 – Deeply Oversold – Bounce Likely – Higher Close

Apr 19, 2024 | Stock Market Outlook

Some Weakness Bounce Higher ClosePrior Trading Day Summary:

Thursday saw another morning bounce attempt but no follow through. However the SPX did not break below 5000 and managed to close at 5011 although minutes before the close it was 5020 which would have turned the day positive.

The SPX lost 11 points to close at 5011. The NASDAQ lost 81 points to close at 15601.

Much of the day volumes were positive on both the SPX and NASDAQ. At the close, the NASDAQ saw 59% of volume being traded to the upside as investors were looking for stocks that have fallen too deeply. On the SPX the end of the day saw 54% of all volume rising as well.

After 5 straight days of stocks falling, Friday looks to be setup for a higher close.

Let’s review the closing technical indicators on Thu Apr 18 2024 to see if the technical indicators are showing a higher close for Fri Apr 19 2024.


Stock Market Outlook: SPX Closing Chart For Thu Apr 18 2024

The index closed below the 50 day moving average and the Lower Bollinger Band. This usually results in a bounce attempt.

The closing candlestick is signaling deeply oversold and the long shadow at the close is signaling a bounce for Friday.

The 21 day moving average is falling which is bearish.

The 50 day moving average is starting to turn sideways. It is at 5118 almost unchanged from yesterday. This is bearish.

The 100 and 200 day moving averages are still climbing. The 200 day is at 4729 which is bullish.

The Lower Bollinger Band is falling and below the 50 day. This is bearish. The Upper Bollinger Band is rising which is presently bearish.

The S&P chart is bearish and signaling that another bounce attempt from deeply oversold will occur on Friday. The SPX is down 4.8% from its March 28 high. The pullback remains a typical bull market correction and could reach 5% before a better bounce occurs. We could see that on Friday.

SPX Stock Market Outlook review of Thu Apr 18 2024 – chart courtesy TradingView


Stock Market Outlook: Technical Indicators Review

Momentum: Momentum is rising and negative. It is deeply oversold. It is signaling a bounce for Friday.

  • Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Tue Apr 2. On Thu Apr 18 2024 the down signal gained strength. The MACD histogram is strongly negative. Usually a bounce can be expected at this negative a level.

  • 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 and oversold. Normally a bounce should be expected.

  • 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 neutral signal in place. It is deeply oversold and is now signaling a bounce for Friday.

  • 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 and deeply oversold. Almost always a bounce should be expected.

  • 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 and oversold. It is signaling to investors that a move higher should be expected for Friday.

  • 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.

Stock Market Outlook: Support and Resistance Levels

5275 is resistance
5250 is resistance
5225 is resistance
5200 is resistance
5190 is resistance
5175 is resistance
5150 is resistance
5125 is resistance
5115 is resistance
5100 is support
5075 is support
5050 is support
5025 is support
5000 is light support
4990 is light support
4975 is light support
4950 is support


Stock Market Outlook for Fri Apr 19 2024 

The technical indicators are deeply oversold and signaling that a bounce is ready for Friday. The index might slip to just below 5000 in the morning, but that remains doubtful. At the first sign of a large bounce, investors will jump in and the index will climb quickly. The MACD indicator which called the sell-off on April 2, is now neutral and signaling a strong possibility of a bounce attempt on Friday that should hold.

Econo9mic indicators on Thursday were a mixed bag with new home sales higher than estimated but below last month’s. Initial jobless claims were lower than expected but in-line with March’s. The real stunner though was the Philadelphia Fed manufacturing survey which jumped to 15.5 when it was expected to fall to 2.5 from 3.2. This was a huge jump and we might see it corrected next month as it is an anomaly and might be a reported mistake. Nonetheless, this number took the wind out of any ally attempt on Thursday. Friday though should finally see a bounce and there are no economic or political events of consequence.


Potential Economic and Political Market Moving Events

There are major events this week on every day except Friday.  Wednesday we get the Fed’s Beige Book.

Monday:

8:30 Empire State manufacturing survey was expected to rise to -10.0 but instead rose to -14.3, weaker than expected.

8:30 Retails sales were expected to drop to 0.3% but rose to 0.7%

10:00 Business inventories were expected to rise to 0.4% but rose to 1.1%

10:00 Home builder confidence index came in as expected at 51, unchanged.

Tuesday:

8:30 Housing starts were expected to dip to 1.48 million but instead fell to 1.32 million.

8:30 Building permits were expected to dip to 1.51 million but dipped to 1.46 million.

9:15 Industrial production for March came in as expected at 0.4%

9:15 Capacity Utilization was estimated to rise slightly to 78.5% but rose to 78.4% instead.

Wednesday:

2:00 Fed Beige Book

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims were expected to rise to 215,000 but came in at 212,000

8:30 Philadelphia Fed manufacturing survey was expected to dip to 2.5 but stunned as it jumped to 15.5 which impacted the morning bounce attempt.

10:00 March Existing home sales were expected to decline to 4.17 million but came in at 4.19 million which was still below 4.38 million for the last month.

10:00 March Leading economic indicators were expected to slip to -0.1% but fell to -0.3%

Friday:

No events






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