With news of First Republic Bank being bailed out by a conglomerate of its peer banks, investors were in a buying mood. Stock rose in a broad-based rally on good volume.
By the close the S&P was up 68 points for a 1.76% gain and a close at 3960, just 40 points away from 4000.
The NASDAQ rose 283 points for a 2.48% gain and a close at 11,717.
The large gain on Thursday added to gains for the week and left the indexes with one of the best weeks to date for 2023.
Let’s review the closing technical indicators from Thu Mar 16 to see what we should expect for Fri Mar 17 2023.
Stock Market Outlook Chart Comments At The Close on Thu Mar 16 2023
On Thursday the S&P closed above the Lower Bollinger Band but below all moving averages but it closed at the 100 day moving average. Buying was swift and the SPX closed slightly overbought. That means a dip to start the day or early morning is likely.
The index closed with a bullish candlestick for Friday.
The Upper Bollinger Band is turning down which is a bearish signal. The Lower Bollinger Band is turning higher which is a bullish signal.
The 200 day moving average is falling back which is bearish. The 21 day is below the 50 day on Wednesday and the 200 day on Thursday. These are down signals.
On Thursday we also received a new up signal with the 50 day moving above the 200 day. This is bullish.
At present there are 3 down signals in place since April 24 and 4 up signals since Jan 13.
The chart is bullish for Friday but will probably start the day with an early morning dip before moving higher.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) down signal lost more strength on Thursday. 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 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 an up signal in place and no longer oversold.
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, negative and oversold.
- 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:
4100 is resistance
4090 is resistance
4075 is resistance
4050 is resistance
4030 is resistance
4025 is resistance
4000 is resistance
3975 is light support
3965 is light support
3950 is good support
3930 is light support
3900 is good support
3870 is light support
3850 is good support
3825 is light support
3810 is light support
3800 is good support
3775 is good support
Stock Market Outlook for Fri Mar 17 2023
The bounce on Thursday was a bit overdone but expected. After hours First Republic Bank fell back and we could see the day start lower on Friday, but then move back higher. Earnings from FedEx were a surprise to the upside and other companies such as Signet also surprised with strong results. This should be enough to stop the early morning drop and help move the index higher into the close.
Potential Economic and Political Market Moving Events
On Thursday initial jobless claims came in lower than expected at 192,000 and continuing jobless claims also fell to 1.68 million. However housing starts and building permits rose sharply which will be seen as inflationary. Meanwhile the Philadelphia manufacturing report was a lot weaker than expected. All of this points to a mixed outlook heading into next week when the Fed announces whether to pause rate increases or continue raising rates.
9:15 Industrial production is expected to be flat at 0.0%
9:15 Capacity Utilization is expected to come in at 78.3% unchanged from the prior reading
10:00 Leading economic indicators are estimated to be slightly weaker at -0.4%
10:00 Consumer sentiment is expected to be unchanged at 67
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