Thursday saw investors reverse Wednesday’s gains and send the indexes lower as interest rates rose higher.
The S&P lot 1.2% to fall 54 points and end the week at 4392. The NASDAQ fell 292 points losing 2.1% to end the week at 13,351.
Let’s review Thursday’s closing technical indicators to see what to expect for the start of the third week of April.
Stock Market Outlook Chart Comments At The Close on Thu Apr 14 2022
On Thursday the 21 day moving average stopped climbing and began to turn sideways. This is bearish.
Meanwhile the Bollinger Bands are into a squeeze which is looking more bearish after Thursday’s reversal day.
The closing candlestick on Thursday is also bearish for Monday. The closing candlestick was back below the 200 day moving average which is also bearish.
The 200 day moving average is rising above the 4400 level which is bullish. The 50 day moving average is beginning to fall again. A drop below the 200 day would be another bearish signal.
The 100 day moving average is also starting to dip lower.
The chart is about 80% bearish for the start of the week.
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 Friday April 8. On Thursday the down signal strengthened. The histogram also is strongly negative.
- 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 back toward oversold levels.
- 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 and is 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 back toward 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 indicating investors should expect lower prices for Monday.
- 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:
4650 is resistance
4640 is resistance
4625 is resistance
4600 is strong resistance
4590 is resistance
4575 is light resistance
4560 is light resistance
4550 is light resistance
4525 is light support
4500 is support
4490 is light support
4475 is light support
4450 is light support
4400 is support
4370 is light support
4350 is light support.
4300 is good support
Stock Market Outlook for Tomorrow – Mon Apr 18 2022
For Monday the technical indicators are decidedly bearish. Many of the bearish signals have gained strength following Thursday’s give back of Wednesday’s rally.
Overall Monday looks bearish with a lower close. There is a possibility of a large move lower on Monday. 4400 was good support followed by light support at 4370 and 4350. That means on Monday the SPX has a good chance to spike above 4400 before falling back and testing the 4370 and possibly the 4350 support levels.
Other concerns include the 21 day moving average which is now falling after having risen and given two important up signals. The 50 day is also falling and could move below the 200 day which would be another bearish signal. For the start of the week I plan to buy SPY put options using Apr 29 expiry at the 435 put strike. On Monday we get the home builders index.
Potential Market Moving Events
10:00 Home builders index
8:30 Building permits
8:30 Housing starts
10:00 Existing home sales
10:30 to 1:00 – 3 different Fed Presidents speak at different events
2:00 Fed Beige Book released
8:30 Initial jobless claims and continuing jobless claims
8:30 Philadelphia Fed manufacturing survey
10:00 Leading economic indicators
12:30 St Louis Fed Bullard speaks (nothing new expected)
1:00 Fed Chair Powell speaks on global economy to IMF (nothing new expected but could see market shift slightly depending on what is said)
9:45 S&P global US manufacturing PMI and US services PMI