Markets struggled on Thursday despite technical indicators that pointed to a positive close for the day.
Instead as fighting continued between Russia and Ukraine, investors were in a selling mood and markets were pushed lower.
The S&P fell half a percent to close at 4363 but early morning the index had broken above the 200 day moving average.
The NASDAQ fell 214 points to end the day at 13537.
While the selling was reasonably heavy at times, the MACD technical indicator did still confirm Wednesday’s up signal.
Let’s review the close on Thursday to see what investors should expect for market direction on Friday.
Stock Market Outlook Chart Comments At The Close on Thu Mar 3 2022
On Thursday, the candlestick was shorter and you can clearly see that it broke above the 200 day early in the day and rallied from the low of the day. In other words, the three candlesticks, taken together, are still pointing higher for the index on Friday.
The Upper Bollinger Band is falling further and while Lower Bollinger Band is simply drifting lower.
The 21 day moving average is nearing the 200 day. A move below it would give the index a third sell signal.
The 21 day moving average is falling lower and could move below the 200 day moving average shortly. This would be a fourth down signal.
All the major moving averages are falling lower although the 200 day is still holding the 4400 level.
The chart remains predominantly negative but as we saw on Thursday, it won’t take much to get the index back bouncing higher.
Stock Market Outlook review of Thu Mar 3 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is negative and falling.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Wednesday March 2. On Thursday March 3, the signal was confirmed.
- 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 positive and slipping lower.
- 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 weak up 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 dipping lower.
- 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 lower and looks like it may continue for several days.
- 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:
4500 is resistance
4490 is light resistance
4475 is light resistance
4450 is light support
4400 is good support and the 200 day moving average
4370 is light support
4350 is light support
4300 is good support
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
4150 is good support
4000 is good support
Stock Market Outlook for Tomorrow – Fri Mar 4 2022
Overnight the market opening futures dropped for Friday, as Russian forces attacked the Zaporizhzhia nuclear power plant which is the largest plant in Europe. With Ukraine’s leader, Zelenskyy accusing Putin of attacking the plant “on purpose”, the Russia-Ukraine war will probably hold center stage on Friday. The technical indicators from Thursday though are still signaling strength for the index. At the same time, it was also interesting how quickly the sharp plunge in futures was recovered on news that the fire was out at the plant and there had been no radiation leak. This advises that the technical indicators are correct in the view that the index is turning bullish despite the fighting and despite testimony from Fed Chair Powell on Thursday.
Friday morning at 8:30 the February employment numbers are released. We could see a move higher at the open if the numbers meet estimates.
Overall the signals were weakened by the pullback on Thursday but the bullish stance was not touched. The SPX is ready to move higher if the war were to “die down”, for the present.
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