Stock Market Outlook for Fri Nov 25 2022 – Overbought – Dips Likely But Bullish

Overbought But Bullish

On Wednesday Nov 23, markets headed higher as the FOMC minutes pointed to a slowing of rising interest rates. The rally was broad based and ended with the S&P just above the 200 day moving average, the highest level since late August.  It closed at 4027.

The NASDAQ rose 110 points to end the day at 11,285.

Friday is a half day for investors with trading ending at 1:00 PM. The bond markets close at 2:00 PM which often means low volumes and sideways trading for stocks.

Let’s review the closing SPX technical indicators from Wednesday to see what to expect for the day after Thanksgiving.

Stock Market Outlook Chart Comments At The Close on Wed Nov 23 2022 

On Wednesday the S&P closing candlestick is just above the 200 day moving average. The candlestick is bullish for Friday.

It is above the 21, 50 and 100 day moving averages which is bullish.

The Upper Bollinger Band crossed above the 200 day on Wednesday November 16 which is a bullish signal. It is continuing to move higher.

The Lower Bollinger Band is turning sideways. This is bullish and could indicate the rally will extend into next week.

A new up signal was generated on Friday Nov 11 as the 21 day moving average is back above the 50 day. This is bullish. The 21 day is continuing to rise and is nearing the 100 day moving average.

The 50, 100 and 200 day moving averages are all turning sideways which is bullish.

There are 6 down signals in place since April and one up signal.

The chart is 75% bullish for Friday.

Stock Market Outlook review of Wed Nov 23 2022

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising and positive.

  • Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Thursday Oct 16. On Wednesday the up signal remained bullish although weaker. The histogram also has a positive signal.

  • 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 is signaling overbought.

  • 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 is overbought.

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 and overbought.

  • 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 positive.

  • 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

4070 is resistance

4050 is resistance

4030 is resistance

4025 is resistance

4000 is resistance

3975 is resistance

3965 is resistance

3950 is resistance

3925 is light support

3900 is light support

3875 is light support

3850 is light support

3825 is light support

3800 is good support

 Stock Market Outlook for Tomorrow – Fri Nov 25 2022 

For Friday the S&P chart is bullish. The technical indicators though are signaling overbought.

With the bond market closing at 2:00 PM and stock markets at 1:00 PM the morning could see weakness and sideways action.

A slightly higher or lower close is expected but the bias is still to the upside on Friday.

Potential Economic and Political Market Moving Events

There are no economic events on Friday.

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