Stock Market Outlook for Fri Sep 9 2022 – Choppy, Dips Likely But Higher

Thursday saw the S&P push above 4000 for the first time since last Friday (Sep 2) When Fed Chair Powell’s comments at Jackson Hole sent the markets plunging. Since then the S&P has struggle and held the 3900 level. Thursday’s close at 4006 sets up the index to push higher for Friday, as you can see in tonight’s technical indicators.

Let’s review the closing technical indicators from Thursday to see what we should expect for Friday.

Stock Market Outlook Chart Comments At The Close on Thu Sep 8 2022 

The closing candlestick on Thursday is bullish for a higher close on Friday. A move above the 50 day moving average would be great to see but many not happen on Friday.

The candlestick closed once again below all major moving averages.

The Bollinger Bands are indicating two possible outcomes. The Upper Bollinger Band is pointing to stocks rising while the Lower Bollinger Band is still pointing to stocks falling.

The 21 day moving average is falling further away from the 200 day. This is bearish.

The 200 day and 100 day moving averages are also falling which is bearish.

The first up signal since April was released Tuesday Aug 2 when the 21 day moving average crossed above the 50 day moving average.

The 21 day moving average moved above the 100 day moving average on Wed Aug 16 for a second major up signal.

The 50 day has been rising but is now turning sideways and could begin to fall shortly unless the index can stage a rally or a bounce.

There are now 2 down signals still in place and two up signals.

The chart is 70% bearish for Friday.

Stock Market Outlook review of Thu Sep 8 2022

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) issued a down signal on Monday Aug 22. On Thursday the down signal lost strength. The histogram also lost strength. Both though are still solidly bearish.

• 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.

• 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 deeply 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.

• 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 and 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:

4250 is stronger resistance

4220 is light resistance

4200 is light resistance

4150 is light resistance

4100 is light resistance

4050 is light resistance

4025 is light resistance

4000 is light resistance

3975 is light resistance and is a decline of 17.5%

3950 is light support

3925 is light support

3900 is strong support

3875 is light support

3850 is good support

3825 is light support

3810 is good support

 Stock Market Outlook for Tomorrow – Fri Sep 9 2022 

For Friday the technical indicators and the S&P chart pattern are turning bullish. September has a poor history for stocks especially the second half of the month.

For Friday the outlook is for stocks to try to continue the bounce but face a choppy day and dips are still likely.

Potential Market Moving Events

On Friday two Fed President’s and one Fed Governor speak. I don’t think we will hear anything new but instead the same hawkish comments on fighting inflation.

Friday:

10: Wholesale inventories revision

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