Before the open on Thursday, the Weekly Initial Unemployment Insurance Claims showed a drop to 214,000 which shows continued strength in the job market. That also means the Fed will continue with rate increases. That number pushed Treasury yields higher which sunk stocks as the morning rally stalled and then died.
The end of the day saw the S&P down 29 points to end the day at 3665. The NASDAQ fell 65 points to close at 10,614. Losses therefore were small on Thursday but continue to show investors remain nervous.
On Thursday after the close SNAP reported devastating earnings result which saw futures show a 27% collapse. Other social media sites, Meta and Alphabet pulled back after hours in sympathy. This will setup the open on Friday for a negative start to the day.
Let’s review Thursday’s closing technical indicators to see what to expect for Fri Oct 21 2022.
Stock Market Outlook Chart Comments At The Close on Thu Oct 20 2022
On Thursday the S&P closing candlestick is bearish and closed at the 21 day moving average. The candlestick again has a long shadow which often signals a bounce attempt.
The Bollinger Bands Squeeze looks more bearish by the close of trading.
The 21 day moving average continued its descent.
The Upper Bollinger Band continued falling and is well below the 100 and 50 day moving averages. This is bearish.
All the moving averages are still falling which is bearish.
There are now 7 down signals in place since April and no up signals.
The chart is 90% bearish for Friday. The Bollinger Bands Squeeze is probably the biggest concern as it is looking more like stocks will move lower perhaps as early as the start of next week.
Stock Market Outlook review of Thu Oct 20 2022
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 an up signal on Thursday Oct 16. On Thursday the up signal lost some strength. The histogram also lost some 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 falling and back 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 an up signal in place but looks set to issue a down signal intraday on Friday.
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 has turned negative.
- 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 slightly but still 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:
3800 is resistance
3775 is light resistance
3750 is light resistance
3730 is light resistance
3700 is light resistance
3675 is light support
3650 is light support
3625 is light support
3600 is good support and is a decline of 25%
3585 is light support
3550 is good support
3530 is light support
3515 is light support
3500 is good support and is a decline of 27%
Stock Market Outlook for Tomorrow – Fri Oct 21 2022
With huge earnings misses by SNAP as well as Whirlpool Corp on Thursday after hours, stocks look set to open lower. The strongest up signal is now coming from the closing candlestick on Thursday. The remaining technical indicators are all signaling lower.
The Bollinger Bands Squeeze looks somewhat ominous especially for the start of next week.
There is a chance of a bounce on Friday but in the face of rising Treasury yields and mortgage rates, the SPX has only a limited chance of being able to mount a bounce on Friday. The 10 year Treasury moved slightly above 4.25% Thursday late evening. It will be hard for stocks to enter much of a rally with rates that high. Especially with the outlook for still higher rates next week.
The day on Friday is setup to end lower. On Friday I am once again buying SPY put options for Nov 18 expiry.
Potential Market Moving Events
This week on Wednesday investors get the Fed’s Beige Book at 2:00 PM. Often that moves markets. On Thursday we get the Weekly Initial Unemployment Insurance Claims and on Friday we get inflation expectations.
Friday
12:00 Index of common inflation expectations for 5 to 10 years for third quarter
Stock Market Outlook Archives
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Morning Investing Strategy Notes for Tue May 5 2026
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Stock Market Outlook For Fri May 1 2026 – Overbought But Higher
Morning Investing Strategy Notes for Thu Apr 30 2026
Stock Market Outlook For Thu Apr 30 2026 – Dips Likely Possible Lower Close
Morning Investing Strategy Notes for Wed Apr 29 2026
Stock Market Outlook For Wed Apr 29 2026 – Choppy But Higher Ahead Of More Earnings
Morning Investing Strategy Notes for Tue Apr 28 2026
