On Thursday the selling in banks, particularly regional banks, continued as investors remain concerned the banking crisis will spread. There is little faith in the Fed at this point especially after Fed Chair Powell on Wednesday advised the banking system was basically fine, only to have Pacific West bank shares tumble within a couple hours of the end of the Fed’s news conference.
On Thursday trading volumes jumped as markets slipped still lower. The S&P lost 29 points to close at 4061, and intraday it tested the 4050 support level several times.
The NASDAQ ended the day down 59 points to 11,966, back below 12,000.
On Friday we get the April jobs numbers and those could impact stocks.
Let’s review the close on Thursday to see what to expect for Fri May 5 2023.
Stock Market Outlook Chart Comments At The Close on Thu May 4 2023
The index closed with a bearish candlestick for Friday but also a signal the index could try a bounce. The SPX fell to the Lower Bollinger Band. The Bollinger Bands Squeeze is in full swing and the signals are now pointing to lower for stocks as the Lower Bollinger Band is turning down while the Upper Bollinger Band is now sideways.
Most major moving averages are climbing which is bullish and the 100 day continued to move higher above the 200 day.
The 21 day moving average however is turning lower.
The S&P chart is bearish for Friday with a good chance for a bounce even part of the day.
There are 7 up signal since January and no down signal left in the chart.
Stock Market Outlook review of Thu May 4 2023
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 on Tue Apr 25 2023. That down signal gained some strength on Thursday.
- 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 and negative.
- 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 and nearing 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 falling and negative. It is signaling 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:
4250 is resistance
4240 is resistance
4225 is resistance
4210 is resistance
4200 is resistance
4190 is resistance
4180 is resistance
4175 is resistance
4150 is resistance
4135 is resistance
4125 is support
4100 is support
4090 is support
4075 is support
4050 is support
4030 is light support
4025 is light support
4000 is support
Stock Market Outlook for Fri May 5 2023
For Friday the technical indicators are continuing to show further weakness along with a chance for a bounce. We get the April non-farm payroll numbers which could send stocks higher or lower.
Apple earnings after hours on Thursday, surprised with better than expected earnings. That should help the index on Friday, even if only at the open.
Potential Economic and Political Market Moving Events
For this week Friday’s April non-farm payroll numbers is the remaining key economic event that will move markets.
Friday:
8:30 April Non-Farm Payroll numbers and unemployment rate.
3:00 PM Consumer Credit