On Thursday the day started strong with the SPX pushing to just above 4255 by mid-morning building on Wednesday’s monster rally. That brought in sellers and the index spent the remainder of the day struggling and eventually closing just above 4200. On the day the SPX lost 3 points to close at 4207. The NASDAQ lost 75 points to close at 12779.
Let’s review the closing technical indicators from Thursday to see what to expect for Fri Aug 12 2022.
Stock Market Outlook Chart Comments At The Close on Thu Aug 11 2022
The closing candlestick is bearish for Friday. The index closed at the low of the day, after closing at the high of the day on Wednesday. Normally this is bearish.
The 21 day moving average is still rising and is above the 50 day for a seventh day. The 50 day moving average is also turning higher. Both are bullish.
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 Upper Bollinger Band is rising and continued to move above the 200 day moving average which is bullish.
The Lower Bollinger Band is climbing higher again. If the Upper Bollinger Band turns sideways, we could see a Bollinger Bands Squeeze by next week. Right now the Lower Bollinger Band is bullish.
The 200 and 100 day moving average are still falling which is bearish.
There are 3 down signals still in place and one new up signal.
The chart is 75% bullish for Friday.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling for a second day 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 on Monday June 27. On Thursday the up signal lost strength. The histogram also lost strength.
- 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.
- 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 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 falling.
- 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:
4300 is stronger resistance
4290 is light resistance
4275 is light resistance
4265 is light resistance
4250 is stronger resistance
4220 is light resistance
4200 is light resistance
4150 is light support
4100 is light support
4050 is light support
4025 is light support
4000 is light support
3975 is light support and is a decline of 17.5%
3900 is light support and is a decline of 19%
3850 is light support and is a decline of 20%
3825 is light resistance.
3800 is good support.
Stock Market Outlook for Tomorrow – Fri Aug 12 2022
For Friday, the S&P chart is 75% bullish which is still quite good. Sometimes the candlestick we saw at the end of trading on Thursday can signal a bounce attempt. More often though, the candlestick is signaling a weak day coming up.
For Friday the technical signals are somewhat mixed but there is a string of weaker signals building. Friday looks set to close lower. A lower close though won’t end this rally.
Potential Market Moving Events
On Friday there are two readings of minor concern unless the 5 year inflation expectations surprises with a strong reading than 2.9%
8:30 Weekly Initial Unemployment Insurance Claims expected to come in at 264,000 and they came in at 262,000
8:30 Consumer price index is estimated to be 0.2%, down from 1.1% last month. Instead it was negative 0.5% which should be seen a bullish by investors.
10:00 University of Michigan consumer sentiment index which is expected to come in at 52.5, up slightly from the prior reading of 51.5.
10:00 University of Michigan 5 year inflation expectations.