On Thursday investors got a slew of reports. Retails sales came in at -0.6% which was above the consensus of -0.3%. Meanwhile retail sales without autos came in at -0.2% slightly below the consensus of 0.1%. Empire state manufacturing came in at -11.2 which was well below estimates of -0.5. Only the Weekly Initial Unemployment Insurance Claims showed continued strength coming in at 211,000.
These reports, fresh on the back of Wednesday’s Powell news conference in which he clearly warned that higher rates are still to come in 2023 was enough to get investors selling.
By the close the S&P was down 99 points to end the day at 3895. The NASDAQ lost 360 points to close at 10,810.
Let’s review the closing technical indicators from the SPX on Thursday to see what to expect for Fri Dec 16 2022.
Stock Market Outlook Chart Comments At The Close on Thu Dec 15 2022
On Thursday the S&P closed back below the 200 day, 100 day and 21 day moving averages. This is bearish. The closing candlestick is bearish but also indicates there is a potential bounce, probably in the morning, to start the day off.
The Bollinger Bands are still in a Bollinger Bands Squeeze which is starting to widen. The squeeze is sending stocks lower which is bearish.
The 21 day is no longer climbing which is bearish. The 100 day is starting to fall which is bearish. The 50 day is continuing to climb which is bullish..
The 200 day moving average is still moving sideways which is neutral.
There are now 4 down signals in place since April 24 and two up signals.
The chart is 85% bearish for Friday which is up from yesterday’s outlook.
Stock Market Outlook review of Thu Dec 15 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal Tuesday Dec 6 2022. On Thursday the down signal jumped in strength. The histogram also gained 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 for a third day and is negative. It is nearing oversold readings.
- 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.
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 nearing oversold.
- 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 negative.
- 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:
4150 is resistance
4120 is resistance
4100 is resistance
4090 is resistance
4070 is resistance
4050 is resistance
4030 is resistance
4025 is light support
4000 is light support
3975 is light support
3965 is light support
3950 is good support
3925 is light support
3900 is good support
3875 is light support
3850 is light support
3830 is light support
3810 is light support
3800 is good support
3775 is good support
3750 is good support
Stock Market Outlook for Tomorrow – Fri Dec 16 2022
It is obvious that the Federal Reserve is unconcerned about equity prices as it focuses squarely on inflation and high employment. It is obvious they want to see unemployment considerably higher. To do that means throwing the economy into a recession. With an economy as hot as it is currently, the Fed seems convinced that the best way to reduce inflation is to push the economy into a recession. This was the prime reason for the selling on Thursday. The chance that the selling is over for now is slim. The technical indicators point to the index as ready for a potential bounce but not a big one or one that will hold. BY the end of the day on Friday the markets will be still lower.
Investors should prepare for a rougher rest of December and at least the first quarter of 2023. That means putting in place trades that profit from further sell-offs and being selective with stocks. It means using strategies that earn profits in volatile markets. For some investors moving to stocks that pay decent dividends and have at least a 3 year track record of recovering from pullbacks is a strategy to possibly consider depending on your outlook. I discuss the outlook further along with methods of profiting in the weeks ahead, in the morning Investing Strategy Notes for today for members.
For Friday, investors should see a small bounce attempt, perhaps at the open and then more selling. The end of the day will be lower.
Potential Economic and Political Market Moving Events
Thursday faces a number of reports, all of which will give some idea how the economy is faring. All of these reports though are looking at prior months. There are some analysts concerned the reports could show a slowing economy which they believe may send stocks lower.
Friday:
9:45 S&P manufacturing PMI which is expected to be unchanged at 47.7
9:45 S&P services PMI which is expected to come in at 46.5, up slightly from the prior reading.
Stock Market Outlook Archives
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Morning Investing Strategy Notes for Tue May 5 2026
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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
