Thursday saw the S&P open higher, climb higher and then sell lower late morning. By 1:00 PM it had broken through support at 3750. The break brought in buyers who spent the afternoon rallying stocks to close just below 3800. For the day the S&P gained 35 points to close at 3795. The NASDAQ rose 179 points gaining 1.6% to end the day at 11,232.
The move higher on Thursday meant further changes in the technical indicators for Friday.
Let’s review Thursday’s closing technical indicators to see if Friday will end higher and close out the week, positive.
Stock Market Outlook Chart Comments At The Close on Thu Jun 23 2022
On Thursday the closing candlestick is bullish for the first time in over 3 weeks.
The Upper Bollinger Band is no longer climbing. The 200 day is still falling but note how the 100, 50 and 21 day moving average averages are turning sideways.
The Lower Bollinger Band is falling which is bearish but also points to a high probability of a bounce.
The chart looks a bit stronger than it did on Wednesday’s close.
There are 4 down signals still in place and there have been no up signals since the start of April.
The chart is 80% bearish for Friday. The chart indicates there is a high probability of some selling intraday but a close above 3800 is likely.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and negative. It is signaling oversold.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Monday June 13. On Thursday the down signal weakened considerably. The MACD histogram is also less negative.
- 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.
- 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 is rising.
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 unchanged and no longer 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.
- 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:
4200 is light resistance
4150 is light resistance
4100 is light resistance
4050 is light resistance
4025 is light resistance
4000 is strong resistance
3975 is light resistance and is a decline of 17.5%
3900 is light resistance and is a decline of 19%
3850 is light resistance and is a decline of 20%
3825 is light resistance
3800 is good support.
3775 is light support
3750 is light support
3730 is light support
3700 is good support
3675 is light support
3650 is light support
3625 is light support
3600 is good support and is a decline of 25%
Stock Market Outlook for Tomorrow – Fri Jun 24 2022
For Friday the technical indicators are signaling that the strength of the downtrend is weakening. There is a strong chance the S&P will end the day above 3800 even though there will be some selling and choppiness.
Potential Market Moving Events
10:00 University of Michigan consumer index
10:00 5 year inflation expectations
10:00 New Home Sales