Stock Market Outlook for Fri Aug 25 2023 – All About The Fed

Day’s Summary

On Thursday stocks started the day with a bang. NVIDIA’s earnings were extremely strong and that shot the index higher to start the day. By 10:00 however, it was all over as the SPX failed to break through the 50 day moving average. The index began to slump as did NVIDIA Stock (NVDA). Other semis who had opened the day higher also began to drop. That drop was noticeable enough and brought in sellers who decided to take advantage of the recent run-up to take profits. As the day wore on the selling increased and the final half hour saw increasing volume as buyers basically stepped aside. With a lack of buyers, stocks tumbled into the close.

The S&P lost 59 points to end the day down 1.35% to 4376.  The NASDAQ lost 257 points to close at 13,463.

While losses were steep, both indexes were clinging to gains for the week by the end of the day. The S&P on the week was still up 6 points and the NASDAQ was up 173 points.

On Wednesday investors were buying stocks ahead of NVIDIA’s earnings and the Fed’s speech Friday morning. On Thursday they were selling stocks after NVIDIA’s earnings and ahead of the Fed’s speech Friday morning. This is what investing often witnesses. Whipsaws in the markets driven by emotion.

Let’s review the SPX index from Thursday to see what to expect for Fri Aug 25 2023.

Stock Market Outlook: SPX Closing Chart For Thu Aug 24 2023

The index stayed above the 100 day moving average on Thursday but failed to break above the 50 day moving average.

The closing candlestick on Thursday is very bearish and back signaling oversold.

The 21 day moving average continued falling could cross below the 50 day Friday or early next week in what would be a major down signal for stocks.

The 50, 100 and 200 day moving averages are continuing to climb which is bullish but the 50 day is starting to turn sideways.

The Lower Bollinger Band is still falling which is bearish. The Upper Bollinger Band is moving lower which advises that more downside lies ahead.

Stock Market Outlook review of Thu Aug 24 2023

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Fri Aug 25 2023 

Fed Chair Powell speaks at 10:05 AM and all investors and analysts will be watching. The market could move lower before he speaks but many analysts believe he will remain hawkish for further rate increases. With an election coming next year, despite claiming to be non-political, I would have to think the Fed would want to get further rate increases out this year and hope for rate reductions heading into the summer and fall next year. But that’s just my opinion.

I am expecting Powell to hold the line and I expect stocks to end the day lower.

Potential Economic and Political Market Moving Events

Today is this week’s main event.

Friday:

10:00 Consumer Sentiment

10:05 Fed Chair Powell opening speech at Jackson Hole summit