On Thursday investors changed their outlook after earnings from META added to those from Microsoft and Alphabet. As well GDP came in lower than estimated at 1.1% and pending home sales fell to -5.2%. All of this might seem to point to a recession but investors saw it as a reason the Fed would not raise rates further, or at the outside slow or pause further rate hikes.
Investors sent stocks soaring with the S&P up 79 points to 4135. The NASDAQ soared 288 points to close at 12142.
Part of the bounce on Thursday was also caused by two days of heavy selling which put a lot of stocks into oversold positions.
Let’s review the closing technical indicators from Thursday to see what we should expect for Fri Apr 28 2023, the final trading day of April.
Stock Market Outlook Chart Comments At The Close on Thu Apr 27 2023
The index closed with a bullish candlestick for Friday. At the same time, the candlestick is common after a bounce. Often this candlestick precedes a dip back which means on Friday we could see some weakness.
The Upper Bollinger Band and Lower Bollinger Band are forming into a Bollinger Bands Squeeze. With the bounce back above the 21 day moving average on Thursday, the Squeeze could end either way, up or down.
Also of significance is the 100 day moving average which is now ready to move above the 200 day. This will end the down signal from April 24 2022 and place the SPX back within the bullish stance of the 21 day leading the market, the 50, then 100 and finally 200 day following along.
The S&P chart is bullish for Friday.
There are 6 up signal since January and just 1 down signal left and as explained, that final down signal should end this week.
Stock Market Outlook review of Apr 27 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and negative but ready to turn 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 Tue Apr 25 2023. that signal was weaker at the close on Thursday. The MACD histogram is negative but it too lost some of the down signal.
- 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 and positive.
- 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 which is ready to turn back positive.
- 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 sharply and positive.
- 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 positive.
- 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
4240 is resistance
4225 is resistance
4210 is resistance
4200 is resistance
4190 is resistance
4180 is resistance
4175 is resistance
4150 is resistance
4135 is resistance
4125 is support
4100 is support
4090 is support
4075 is support
4050 is support
4030 is light support
4025 is light support
4000 is support
Stock Market Outlook for Fri Apr 28 2023
For Friday the MACD down signal is still present but it lost strength. As well a number of indicators that were signaling negative have turned back to up signals. Many are back positive.
For Friday, stocks will see some weakness, particularly at the open to mid-morning. The close though has a good chance to be still higher.
Potential Economic and Political Market Moving Events
For Friday there are a number of economic reports but none are expected to bounce markets higher or lower.
Friday:
8:30 Personal income is expected to be 0.2%
8:30 Personal spending is expected to be flat at 0.0%
8:30 PCE Index and Core PCE Index
10:00 Consumer sentiment which is expected to come in at 63.5